(Bloomberg) — The big stock rally of 2019 might still be on, according to Evercore ISI.
Fears of an all-out U.S.-Chinese trade war rocked equities last week after President Donald Trump set the stage with tweeted complaints about China, followed by talks that didn’t produce a deal but avoided a complete breakdown.
While the S&P 500 fell the most in a week since December and the Shanghai Composite dropped 4.5%, U.S. shares also showed resilience.
“Bullish intraday reversals atop key support strongly suggest that the week-long 2% pullback is over and the historic first half surge in stocks is poised to resume,” Evercore technical strategist Rich Ross wrote in a note May 10 entitled, “Rational Exuberance.” The S&P 500’s next target is 3,000, he said. That would be a 4.1% gain from Friday’s close of 2,881.40.
Last Monday, a drop of 1.6% melted in the afternoon and the gauge ended down 0.5%. On Tuesday, a 2.4% decline moderated to 1.7% at the close. On Friday, the S&P dropped as much as 1.6% before ending 0.4% higher.