Stock Market Correction Expected as Consumer Weakness Looms

According to Yahoo News, Wells Fargo investment strategist Chris Harvey predicts a stock market correction as the year comes to an end. Harvey believes that a near-tapped out consumer and overly optimistic projections about interest rate cuts from the Federal Reserve indicate that now is not the time for investors to be chasing risk. The S&P 500 jumped 8.9% in November, representing its 18th biggest monthly gain since 1950, and stocks continued their gains with major indexes advancing by about 0.5% on Friday. Harvey points out that the VIX, also known as the stock market's fear gauge, is hovering at the historically low level of 13, suggesting that investors might be getting too complacent at a time when they should be worrying about an economic slowdown. He questions how a bull market could continue its run given that consumers are showing signs of weakening, equity valuations are high, and the Fed could leave interest rates higher for longer well into 2024. Harvey recommends investors position their portfolio to be defensive heading into next year, allowing them to take advantage of any potential volatility spikes and stock market declines. Harvey has a 2024 S&P 500 price target of 4,625, representing potential upside of less than 1% from current levels.