Oppenheimer's chief investment strategists said the firm is revising its year-end price target for the S&P 500 lower in a note to clients Monday.
The analysts revealed the firm is lowering their price target for the benchmark index to 4400 from 4900 to reflect the S&P 500's three-month sell-off, pushing the benchmark last week to correction levels.
"Mixed Q3 earnings results and cautious guidance among members of the so-called 'Magnificent Seven' technology and tech-related stocks along with a spike early last week in longer term, market-determined interest rates raised concerns among market participants that the Fed might keep interest rates at current levels or even raise rates somewhat 'higher for longer” pushed the S&P 500 and the NASDAQ Composite into 'correction' territory (declines of 10% or more from a peak level)," the analysts said.
"With the S&P 500 standing at 4117 as of last Friday, our 4900 target is, in our view, unlikely to be reached by year-end given the soured sentiment on equities that has prevailed over the past three months on increased uncertainty as to how long the Federal Reserve will hold rates at current levels (or even raise them further) as headline inflation remains stickier than expected even as core inflation (ex-food and energy) has appeared more responsive to tighter monetary policy," they added.
The investment strategists also noted that alongside geopolitical and economic uncertainty, part of the recent downside in stocks "reflects a market tantrum by highly leveraged players in the market who have to deal with the new paradigm of the end of free money."
Despite the three-month corrective occurrence experienced by stocks since August, Oppenheimer believes it is "likely near an end," with "valuations having come down substantially across the sectors" and resilience remaining "the operative word for the US economy."
"We remain positive on equities and view fixed income as highly complementary for diversification purposes though not broadly competitive with equities over the mid to longer term," the analysts said.