Expert sees 8.0% downside in S&P 500 despite PCE data today

S&P 500 opened in the green today after the U.S. Bureau of Economic Analysis said the core personal consumption expenditures price index rose in line with expectations in October.

Lakos-Bukas shares his view on S&P 500

For the month, the Fed’s preferred inflation gauge popped 0.2% versus a wider 0.3% increase in September.

Still, Dubravko Lakos-Bujas – chief global equity strategist of JPMorgan does not expect the coming year to be an exciting one for U.S. equities. He recently told clients in a research note:

Equities are now richly valued with volatility near the historical low, while geopolitical and political risks remain elevated.

Versus last year, the said index jumped 3.5% in October – also in line with Dow Jones estimates. Note that the S&P 500 has gained nearly 11% since the start of this month.

JPMorgan analyst is bullish on utilities stocks

Lakos-Bujas currently recommends sticking only to high-quality stocks that are trading at a reasonable price. In particular, he sees the utilities space in somewhat of a “sweet spot” for now.

On Thursday, headline PCE was reported up 3.0% on a year-over-year basis for October. The Bureau also said that personal income as well as spending climbed in line with expectations month-over-month (0.2% each).

Still, the JPMorgan expert forecasts “softening consumer trends” to restrict profit growth in S&P 500 at up to 3.0% in 2024. All in all, he sees the benchmark index closing next year at 4,200 – down about 8.0% from here.

Last week, Warren Pies – the Founder of 3Fourteen Research also said bonds were a better investment than stocks in the current environment as Invezz reported here.