Wells Fargo Securities’ Chris Harvey is finding more reasons to be upbeat on stocks, as Wall Street battles to stay optimistic.
On Friday, the index surged following an encouraging April jobs report. Both the Dow and S&P 500 Indexes saw their best daily performance since April 10, but still ended the week marginally lower.
However, according to Harvey, investors should soon start seeing fewer declines. He told CNBC that a sustainable move higher is in the cards.
“I’m not a real positive guy, but I’m starting to turn more positive. We’re starting to see good things across the marketplace. Value is being uncovered,” the firm’s head of equity strategy said recently on CNBC’s “Futures Now.”
His latest assessment came as the Dow fell back into correction territory last week for the third time this year — but it didn’t stay there.
“The bounce could be a few weeks away. We don’t think we are any more than two months away,” said Harvey, noting that’s when second quarter earnings season kicks off.
Harvey sees strong earnings reports ultimately pulling the market out of its rut. He characterized 2018’s violent market sell-offs as “classic textbook” in a Federal Reserve tightening cycle.
“When the Fed tightens, you usually see the curve flatten. When the curve flattens, you have a price adjustment. The price adjustment in the equity market is 5 to 10 percent,” he added.
Harvey’s S&P 500 year-end target is 2950 — a 10 percent gain from its current levels.
He views this environment as a buying opportunity, and added that he’s partial to technology and financials. Yet Harvey urged investors to be deliberate with their choices.
“You don’t have to run. It’s really be selective, be slow, be methodical and look for opportunities,” Harvey said. “It’s a walk, not run-type of situation.”
