Head of Stock Strategy at Rich Nation Bank: Only the Federal Reserve can suppress US stocks now.

The strong rebound of the US stock market this year has surprised many Wall Street analysts and hit the shorts. Chris Harvey, head of stock strategy at Wells Fargo, believes that the current strong rebound of US tech stocks will not stop until the Federal Reserve becomes more aggressive and disrupts the US economy. Harvey pointed out that the current US stock market is similar to the tech boom of 1999 and 2000. At that time, the rise did not end until tighter monetary policy disrupted the market. Harvey explained that the most important thing now is that tech stocks will not collapse unless the economy is disrupted, and the market trend will not change. This is what happened in 1999. This may also happen now. The economy cannot be disrupted until the Federal Reserve becomes more aggressive. So we will have some fluctuations, the market will pull back, and large tech stocks will pull back, but the overall theme still exists until the economy collapses, and we will truly consider the issue of trend disruption. Harvey said that although the Federal Reserve has been actively fighting inflation, the sensitivity of the US economy to interest rates is much lower than expected. Since the banking crisis in March, the possibility of an economic recession has decreased. The financial situation of consumers and companies remains resilient, although some industries have cracks under the pressure of rising borrowing costs, other industries are still strong. Harvey expects that it will take some kind of shock to cause the US economy to enter a recession. It will take longer than expected. Harvey also pointed out that another reason for the strong rise of large tech stocks this year is that institutional investors have been underweighting stocks such as Apple and Microsoft for many years, and now they are catching up with their allocations. Wells Fargo's target for the S&P 500 index at the end of this year is 4200 points, about 4% lower than Wednesday's level. Last October, Harvey was one of the few strategists on Wall Street who correctly predicted that US stocks would rise after the earnings season. However, his prediction that the S&P 500 index could fall to a low of 3410 points this year has not yet been realized, and it seems inaccurate at present. Harvey's colleague, Michael Hartnett, who was hailed as "Wall Street's most accurate analyst" for predicting the market trend in 2022, recently made a comparison between the current market and 2000. However, his conclusion is different. He still believes that US stocks are difficult to avoid a big drop, just like in 2000 and 2008, and a sharp rise will be followed by a sharp fall. Hartnett's judgment on the US stock market this year is not accurate. He analyzed the three reasons why he was "slapped in the face", namely, the US economy did not decline, credit did not tighten, and the AI bull market. On Wednesday, Federal Reserve Chairman Powell attended a hearing of the US Congress. In his submitted testimony, he once again emphasized that the temporary suspension of rate hikes in June was not a sign that the Federal Reserve had completed rate hikes. Inflation pressure is still high, and most FOMC members support continuing rate hikes this year. The interest rate decision will be made step by step based on economic data, and there is no preset route.