Societe Generale (OTC:SCGLY) strategists anticipate that the next year could be a pivotal year for the S&P 500. The index should be able to “find its ‘true’ bottom for this cycle,” said the Head of US Equity Strategy at the European bank.
The bank is projecting 150 basis points of Fed rate cuts, a slowdown in GDP growth, and clarity on the political election cycle by the end of the year.
Despite expecting a mild recession in the middle of the year, a credit market sell-off in 2Q, and ongoing quantitative tightening, Societe Generale sees the S&P 500 as entering 'buy-the-dip' territory, with leading indicators for profits improving.
“We keep our target unchanged for end-2024 at 4,750 (+5%),” the analysts wrote in a note.
SocGen prefers Growth over Value, Industrials over Consumers, and the Tech-heavy Nasdaq over the highly leveraged small caps Russell 2000.
Along these lines, the Energy sector is downgraded to Neutral, and Financials remain Underweight for the third consecutive year. The focus on controlling inflation in the 2024 election year lowers the probability of a geopolitically-driven energy shock.
Within defensives, Societe Generale favors Healthcare over Staples and Utilities.