U.S. stock investors should brace for a correction in upcoming months, Wells Fargo & Co. strategists said, joining a chorus of warnings that Wall Street is in for a bumpier ride after last year's powerful rally.
"Pullbacks will likely be more frequent in this choppier equity market," the strategists led by Christopher P. Harvey wrote in a note to clients, forecasting a 10% drop for the S&P 500 Index by summertime. "Ultimately, the bend-but-not-break market mentality finally fails investors in 2022."
The U.S. equity benchmark is trading near a record high, after delivering a blockbuster 27% rally last year.
With the Federal Reserve preparing to hit the brakes on support measures, and fears rising that economic recovery may have reached its peak, strategists from Goldman Sachs Group Inc. to BlackRock's Investment Institute expect returns to be more muted this year, while JPMorgan Chase & Co. warned this week that the U.S. market "could stall" if the outperformance of technology stocks starts to wane.
