Wall Street analysts urge investors to buy stocks after U.S. market rout
Leading Wall Street strategists view the sharp decline in the U.S. stock market as a buying opportunity. Despite a 4.4% drop in the S&P 500, most analysts maintain their forecasts for a recovery in stock prices by the end of 2026.
According to Bloomberg, the sell-off followed the U.S. midterm elections, in which Democrats gained control of both chambers of Congress. Investors fear that new restrictions could slow the development of artificial intelligence infrastructure.
On Thursday, November 5, the Nasdaq 100 fell 6.4%, while the market capitalization of S&P 500 companies declined by approximately $3 trillion. The index partially recovered on Friday, gaining 0.3%.
Strategists expect S&P 500 to rise by year-end
Mike Wilson, Morgan Stanley's chief U.S. equity strategist, believes investors should increase their exposure to risk assets over the next two to three weeks.
He maintained his year-end S&P 500 target of 8,000 points, implying an 8.4% gain from Friday's close. The analyst recommends focusing on consumer stocks, particularly if interest rates and oil prices decline further.
Ed Yardeni, founder of Yardeni Research, also views the sell-off as a correction rather than the beginning of a major crisis. His S&P 500 target stands at 7,900 points, and he identifies healthcare as an attractive sector.
Jonathan Golub, chief strategist at Seaport Global Holdings, forecasts that the index will reach 8,200 points and believes it is premature to exit stocks after the recent decline.
According to Bloomberg, the average analyst forecast puts the S&P 500 at 7,973 points by year-end, representing a gain of approximately 8.1% from current levels.
AI sector remains the biggest source of risk
The main pressure on U.S. stocks stems from concerns about technology companies' spending on artificial intelligence. On Thursday, the Philadelphia Semiconductor Index plunged 12%, extending its decline from the June peak to 36%.
Wells Fargo strategist Ohsung Kwon warned that shares of chipmakers and AI infrastructure suppliers could remain under pressure. However, he did not rule out potential market support from Alphabet and Amazon if the companies reduce capital expenditures.
Following the sell-off, the U.S. market showed early signs of recovery. However, concerns about massive AI investments, inflation, and interest rates continue to weigh on investor sentiment.
The market rout wiped approximately $3.2 trillion off the market capitalization of U.S. companies, according to a recent market review. Future performance will depend in part on the resilience of the technology sector and expectations for monetary policy.
Earlier, we reported that Intel shares plunged 29% after the company released its financial results. The decline was Intel's largest since 1974 and heightened investor concerns about the outlook for individual semiconductor manufacturers.
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