(Reuters) - Wells Fargo Investment Institute (WFII) boosted its 2024 year-end target for the S&P 500, citing an improved economic outlook and expectations of interest-rate cuts through the year.
The institute expects the index to end the year in the range of 4,800 to 5,000, against the 4,600 to 4,800 range forecast earlier.
It expects the U.S. Federal Reserve to start easing interest rates in a "restrained" manner by mid-2024, with three cuts through the year, bringing the Federal funds rate to between 4.50% and 4.75%, WFII said in a note on Tuesday.
WFII expects the U.S. economy will grow at a rate of 1.3% this year versus its previous forecast of 0.7%, and sees a flatter "U" path for the economy, with a "somewhat stronger full-year 2024 growth pace on balance".
Separately, it upgraded the global energy sector to "favorable" from "neutral", expecting oil prices to finish the year higher after bottoming out.
But it downgraded the financials sector to "unfavorable" from "neutral", forecasting that it "will likely feel the brunt of the current economic slowdown".