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From: Julius Wong	7/13/2024 7:57:51 AM
	1 Recommendation of 8258

Wells Fargo calls for an oversold bounce rather than a market rotation Jul. 12, 2024 8:51 AM ET By: Jason Capul, SA News Editor primeimages Wells Fargo argued on Friday that the financial community should be pumping the brakes on the idea of a “great rotation” as the brokerage believes in an oversold bounce rather than a market rotation. “We believe the ‘Great Rotation’ needs lower rates + earnings optimism. CPI delivered the lower rates, but earnings concerns linger post-DAL. We see an oversold bounce, not a rotation. The best risk/reward appears to be greater rate sensitivity,” Wells Fargo’s equity analyst Christopher Harvey indicated. The California-headquartered bank went on to add: “We would embrace ‘rotation’ if we see stocks stop going down on bad news. For now, we remain concerned about earnings, especially for SMID-caps.” At the start of the 2024 trading year, Wells Fargo recommended deploying capital in a sector mix of 60% towards Communication Services (NYSEARCA: XLC), 30% to Health Care (NYSEARCA: XLV), and 10% towards Utilities (NYSEARCA: XLU), as this approach offered upside participation and downside protection. Now, Wells Fargo has repositioned its defensive mix towards 20% to Health Care ( XLV) and 20% to Utilities ( XLU) to increase rate sensitivity. “We think rates are basically capped and heading lower due to the Fed and a slowing economy.”

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