Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, believes that while investors are prepared for the Fed's looming move of raising rates, there will still be some uncertainty in the market over the next several months. Wren also adds that the risk of a recession will be higher next year compared to this year.

Closing Bell

Stocks Close Higher Ahead of Wednesday's Fed Decision

But let's turn back to the major indexes choppy day on Wall Street again. And joining me now is scott wren, senior global market strategist at the Wells Fargo Investment Institute scott. It's good to see you. So, again, another choppy day and a huge Fed decision on top tomorrow. What do investors need to know? Well, Kristin, I think, you know, for sure we're going to get a rate move. We think it's going to be 50 basis points. I guess there's an outside chance that would be 75, but I think the Fed would have done a better job prepping us for a 75 basis point hike, which really they they haven't done. So I think you can count on 50. We know we're going to get a series of hikes here, we know the federal funds target rate is going to be a lot higher than it is right now at the end of the year. And as far as the market goes, I don't think there's a lot of uncertainty about what's going to happen with the funds rate this year. But certainly we know the economy is slowing down earning season has been fine, but there's some, some, some bumps in the road out there as the market tries to, Uh, find a bottom in here. And I think it's a process and we think the market will be a little bit higher by the end of the year, but, but there's gonna be some uncertainties here, at least over the next few months. Okay, so here's the million dollar questions got higher from our current levels, which are right near those 2022 lows are higher on the year, I think a lot of people still looking at the outlook that does appear pretty cloudy. What do you say? Yeah. Hi, we we you know, probably I think the S and P finished about 4700 at the end of last year. We've got a 46 100 target out there for the end of this year. So flat to slightly down is what we think is going to happen this year. And then as we look out to your in 2023 we just released these uh these first projections Last week. We think the market will be around 40 900, interesting. So we do have pent up demand based on your forecast. It sounds like are you concerned about a recession. Do we see a recession the first two quarters of this year and then move forward? We don't this year, I think, I think Kristin, we're going to get out of this year without a recession. But certainly, you know, we have a published GDP number out there for next year of just plus .4%. So, you know, that's pretty close to zero. The the uncertainty is going to continue the risk of a recession next year is going to be higher than it is this year. And it's certainly something that we're going to pay attention to. But you know, it's going to be modest growth this year, the second quarter number won't be that bad, it'll be a decent GDP growth number. But once we move into 2023 there's a higher probability that we're going to see a recession. So at least for this year Scott, at least for the New York term is the Fed, the biggest factor of half a dozen factors out there that are risks to the market is the Fed, the biggest factor moving the market. Well I think right now you're looking at inflation, I mean that's the biggest factor of course that's driving the Feds. So so those two are combined and that's probably the biggest factor we have out there. But I tell you, kristen really, I think this last leg down that we had in the market because really we're hanging in there about you know, 10% maybe a little bit less below the all time record high set in early january. I think the big factor more recently has been this china, no tolerance on covid policy and just the problems the, the supply chain problems that that is causing and that are continuing to cause employers to pay up for wages to pay up for inputs. Um So those two things, the supply chain, the Fed and inflation are those three things really, I think those are going to be the main drivers if we see some improvement there in terms of inflation coming off a little quicker than what we think or as we move into the end of the year, if we see this supply chain disruption and the no tolerance policy out of china, easing up a little bit that could help the market. Um, Scott run always good to get your breakdown. Scott's a senior global market strategist at the Wells Fargo Investment Institute. Thank you.