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HSBC Strategists Expect Fading Stocks Rally in Challenging Year

  • Strategists raise year-end S&P 500 target to 4,900 points
  • Prefer Russell 2000, small caps over S&P 500 and tech stocks

A lose-lose situation may be emerging for risk assets this year, according to HSBC strategists. 

If economic growth rebounds in line or above expectations, this will open the door for “fairly aggressive” tightening from the U.S. Federal Reserve, HSBC strategists led by Max Kettner said in a note. On the other hand, even if supply chain issues dampen recovery--a scenario that HSBC sees as more probable--the Fed is unlikely to quickly change its strategy, resulting in “further deterioration of the growth-inflation trade-off.”