The recent dramatic pullback in stocks is a big buying opportunity, according to one Wall Street firm.
Wells Fargo Securities predicts the will rise by a double-digit percentage including dividends by year-end 2018. And the bank thinks most of that move will come very soon.
"We've been telling clients to slowly and methodically invest their cash as the sell-off unfolded. Now, we're telling clients that they're free to trade (invest the balance of your cash)," analyst Christopher Harvey wrote in a note to clients Wednesday. "In the near term, we feel the worst is over for stocks and the pullback in the equity market provides almost a free look at earnings."
"From here, we see almost 10 percent upside for the S&P 500 and we believe all or most of that gain will transpire over the next 3-6 months," he added.
Harvey raised his 2018 S&P 500 price target to 2,950 from 2,863, representing 9.5 percent upside to Tuesday's close.
A stronger-than-expected jobs report and wage number on Friday sent interest rates higher, and sparked a two-day sell-off of 6.1 percent in the S&P 500. Investors were concerned the Federal Reserve will more aggressively reduce its monetary stimulus and increase interest rates as the economy continues to strengthen.
The analyst raised his earnings per share forecast for the index to $150.76 from $146.01 due to the better-than-expected December quarter corporate reports so far this earnings season.