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Two Months After Stock Rout, One Bull Becomes First to Blink

Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, slashed her year-end S&P 500 projection to 2,890 from 3,000.

By Elena Popina

(Bloomberg) --When the nerves frayed in February as the S&P 500 lost 10 percent within days, Wall Street held tight to its year-end estimates for the gauge.

It was when the selloff subsided two months later that the index got its first target price cut from a major bank.

Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, slashed her year-end S&P 500 projection to 2,890 from 3,000 on Tuesday. She said that the backdrop for U.S. stocks has eroded, though it hasn’t yet become negative.

Among 24 strategists whose S&P 500 calls Bloomberg tracks, she is the first to cut the year-end estimate for 2018, data compiled by Bloomberg show.

Since November, when the strategists started issuing their outlooks en masse, not a single one reduced their target until today. Optimism that Donald Trump’s tax cuts would fuel corporate earnings growth led to a fury of target price upgrades between December and late February.

Calvasina also slashed the index’s earnings-per-share estimate to $151 from $155 amid a reduction in margin assumptions for earnings before interest and taxes. Calvasina downgraded the technology sector to an underweight and upgraded utilities to market weight, saying the sector is the best choice for defensive exposure.

 
 
To contact the reporter on this story: Elena Popina in New York at [email protected] To contact the editors responsible for this story: Arie Shapira at [email protected] Andrew Dunn

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