Few people can tell you more about the S&P 500 than market historian and S&P Chief Equity Strategist Sam Stovall. (It runs in the family: his father, Bob Stovall, is a market veteran who is also known for popularizing the Super Bowl indicator.)
So, it’s probably worth noting that Sam Stovall just cut his 12-month target on the S&P 500 to 1260, down from 1400.
“The target reduction reflects our belief that the risk of global recession is rising,” said Stovall. “The near-term outlook for the equity markets may look favourable, but we see anemic economic growth pressuring long-term equity performances.”
What does he mean by a favourable near-term outlook? He explained in an interview on PBS’s Nightly Business Report:
Well, actually, history says that we might end up with a fairly favourable fourth quarter because this most recent decline of more than 14 per cent was the tenth time since World War II that we had a third quarter decline in excess of 10 per cent. And in the prior times, the average price change was a gain of 7.2 per cent and we saw the market rise in eight of those nine observations.
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