US stocks are ending March with a decline they haven’t seen in a single month since September of 2022 as the White House continues to stir uncertainty for global investors.
Fears of Trump’s tariffs leading to trade tensions and even a recession eventually pushed the S&P 500 index into the correction territory this month.
However, the benchmark is positioned for some relief in April, according to Ari Wald. He’s a senior technical strategist at Oppenheimer.
History says the S&P 500 will gain in April
Trump’s trade policies triggered a massive sell-off in the US tech stocks this month that ultimately saw the S&P 500 tank below its 200-day MA.
Historically, the benchmark index ends up recovering in April when it starts the month below that long-term moving average, the Oppenheimer strategist argued in his latest report.
Ari Wald analyzed data for the past 75 years to conclude that SPX tends to gain about 2.5% on average in April when the aforementioned conditions are met.
Plus, the implementation of new tariffs on April 2 (Liberation Day) could at least offer some certainty, which may also help US stocks inch up a little in the coming months.
Note that the benchmark S&P 500 index is currently down more than 8% versus its year-to-date high.
Long-term remains foggy for the S&P 500
While the Oppenheimer strategist signaled potential for a near-term bounce in the S&P 500, he remains cautious on US stocks for the longer term.
Ari Wald agreed that a potential recovery in the benchmark index in April could prove short-lived, adding,“investors buying the current sell-off should be keying on relative strength and thinking in terms of long-term accumulation.”
Among the names that Oppenheimer calls “favourites” heading into April are giants like Costco that stand to benefit from its “unique and improving consumer value proposition” amidst a potential recession.
A 0.49% dividend yield makes COST all the more attractive to own at current levels.
Goldman Sachs lowers S&P 500 target again
Goldman Sachs agrees with Wald’s longer-term view on the S&P 500. The investment firm trimmed its year-end target on the benchmark index again to a Street-low on Monday.
Its chief of US equity strategy, David Kostin, now expects SPX to remain capped at 5,700 in 2025, which indicates potential for a little over 1.0% gain only from current levels.
“These estimates incorporate downward revisions to earnings growth and valuations, reflecting a weaker base case economic growth backdrop, higher uncertainty, and higher recession risk,” he told clients in a recent note.
Note that Goldman Sachs had already lowered its year-end target on the S&P 500 index earlier in March from 6,500 to the 6,200 level. So, today’s cut to 5,700 marked the second time it has trimmed the target on SPX.
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