Posted 1/23/2024, 8:43:00 PM
Wells Fargo: Earnings Set to Drop 21% as Economy Slows, Valuations Still Overly Optimistic
- Wells Fargo expects "earnings for all equity classes peaked and will move lower as the economy weakens and revenue growth stalls"
- Median peak-to-trough drop in S&P 500 earnings per share during past recessions was 21.4%
- Wells Fargo sees "headwinds" from slowing economy and tighter financial/credit conditions
- Recent stock market strength tied to expectations of "aggressive rate cuts, a still strong economy, low inflation"
- Once slowdown "fully priced into" valuations, Wells Fargo will "look for an opportunity to position for an emerging early cycle recovery"