The S&P 500 has started 2024 on the backfoot, snapping a nine-week rally as traders dial back some of their exuberance over the timing and scale of US interest-rate cuts. Wilson — who was bearish for most of last year even as stocks rallied — expects that shifting views on the economy will fuel stock-market “twists and turns” throughout this year.

“This suggests a trading range until the outcome is more definitive,” he wrote in a note. “Growth will likely need to reaccelerate (while rates remain relatively tame) for equity prices to move materially higher from here.”

As a result, he suggests focusing on single stocks, factors and sectors rather than cap-weighted indexes.

Wilson laid out three possible scenarios for the US economy this year. The first — seen currently the most likely — is a soft landing with muted real growth and decelerating inflation. In this situation, a barbell strategy of defensive growth stocks and late-cycle cyclicals will continue to outperform. 

The other outcome is a soft landing with accelerating nominal growth. This bullish view has gained probability share after last month’s meeting of the US Federal Reserve, according to Wilson. The final scenario is a hard landing, with recession odds currently still above average as several soft and hard macro data series remain depressed relative to history. Against this backdrop, traditional defensives would outperform, he said.

Other Wall Street strategists have been warning that US equities are due a pause after last quarter’s sharp gains. Nonetheless, several, including those at Goldman Sachs Group Inc. and Bank of America Corp, still expect the S&P 500 to set new record highs this year. Most recently, RBC Capital Markets strategist Lori Calvasina raised her target to 5,150, implying the index will gain about 10% through 2024.

Wilson has maintained his 2024 target of 4,500 for the S&P 500 since November. The index closed Friday at 4,697 points.