Wells Fargo Strategist Doesn't See Tech Rally Stalling Until Fed Turns Aggressive, Says Market Resembles Boom Of Year 2000

Wells Fargo's head of equity strategy Chris Harvey reportedly said the rally in technology stocks will not stop until the Federal Reserve becomes more aggressive and breaks the economy. The market now resembles the tech boom of 1999 and 2000, which didn't end until tighter monetary policy had impacted stocks, he told Bloomberg TV.

"The number one issue is: tech is not going to roll over, the major theme isn't going to roll over until you crack the economy. That's what happened back in 1999, that's likely what's going to happen now," Harvey said.

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"And I don't think you can crack the economy until the Fed gets more aggressive. So we'll have some wiggles, I think we'll have a pullback in the market, we'll have a pullback in big tech, but that overall theme is still in place and not until the economy breaks do we really think about that trend breaking," he stated, according to the report.

Federal Reserve Chair Jerome Powell acknowledged the hardship caused by high inflation and reiterated the Fed's dedication to bring inflation down to the 2% goal, during his Wednesday testimony before the House Financial Services Committee. Investors and traders have begun weighing in the possibility of extended rate hikes, especially after U.K. inflation surprised on the upside, with CPI rising 8.7% from a year ago in May.

Resilient Economy: Harvey pointed out that while the central bank has been aggressive in tackling inflation, the U.S. economy has been a lot less rate-sensitive than anticipated, and the probability of a recession has come down since the March banking crisis.

"So really, you need some sort of shock to get us into a recession," he said. "We need a lot more time. This is taking a lot longer than we expect," Harvey said according to the report.

Wells Fargo's year-end target for the S&P 500 is 4,200, it said. The SPDR S&P 500 ETF Trust SPY closed 0.51% lower while the Invesco QQQ Trust Series 1 QQQ declined 1.36%, according to Benzinga Pro.

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