Wall Street strategists see a buying opportunity in the market

Some Wall Street strategists are of the view that current levels are appropriate for gradually increasing risk.

With expectations that Democrats, who won the majority in both the Senate and the House of Representatives in the US midterm elections, may slow down the pace of artificial intelligence investments, the S&P 500 Index decreased by 4.4 percent on Thursday and the Nasdaq 100 Index decreased by 6.4 percent. Although the S&P 500 rose 0.3 percent on Friday, it has fallen 2.5 percent since the polls closed on Tuesday.

“This is where you need to increase risk over the next 2-3 weeks,” said Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley. While Wilson stated that the size of the sales exceeded expectations, he maintained his prediction of a recovery in US stocks and his year-end target of 8,000 for the S&P 500. This target indicates an 8.4 percent increase compared to Friday's closing. Wilson and some Wall Street strategists say the recent sell-off is part of the correction seen in the S&P 500 in recent weeks rather than a broader pullback in AI investments.

Yardeni Research Chief Investment Strategist Ed Yardeni stated that valuations in artificial intelligence stocks have increased and these valuations have started to decline with the recent sales. Yardeni said he did not expect this to develop into a disruption that would have significant negative effects on the economy. Yardeni, who has a year-end target of 7,900 for the S&P 500, said that he considered the last move as a correction and that the buying opportunities he expected after the elections began to emerge.

Approximately $3 trillion was wiped from the S&P 500's market value with Thursday's decline. According to data compiled by Bloomberg, strategists' average year-end target for the index is 7,973.

Seaport Global Holdings Chief Equity Strategist Jonathan Golub also stated that he did not change his positive view on stocks due to the movement following the elections. Golub's year-end target for the S&P 500 is 8,200.