Stocks are headed nowhere fast with high rates likely to weigh on the S&P 500 for all of 2024, Wells Fargo says

• Stocks won't bring much joy in 2024, according to Wells Fargo.
• The bank expects the benchmark S&P 500 to trade within a narrow range the whole year.

Investors shouldn't count on the stocks' stellar run lasting much longer with higher interest rates likely to weigh on the market for all of 2024, according to Wells Fargo.

In a research note published Monday, strategists at the bank said they expected the S&P 500 to be trading at between 4,600 and 4,800 points by the end of 2024.

Even the bullish end of that price target would represent just 5% upside from the 4,550 level the benchmark index was at as of Monday's closing bell.

"We anticipate pressure on equity earnings and prices as markets and the economy digest the most aggressive Federal Reserve tightening cycle in decades, the highest interest rates in the past 15 years, and a stressed and weakening consumer," Wells Fargo Investment Institute analyst Austin Pickle wrote in Monday's outlook.

"It is our belief that equity rallies will be capped until a path to an economic and earnings recovery becomes clear," he added.

Since March 2022, the Fed has lifted rates from near-zero to around 5.5% – the highest level since before the 2008 financial crisis – in a bid to curb runaway inflation.

Consumers tend to spend less when borrowing costs are higher, which in turn drags on listed companies' earnings.

In an interview with CNBC Monday, Wells Fargo's head of equity strategy Chris Harvey – who has set a 4,625-point price target for the S&P 500 next year – echoed Pickle's view that stocks are headed nowhere fast.

Stocks will do a "whole lotta nothing" in 2024, he said.

Wells Fargo's latest outlook puts it on the more bearish side of Wall Street, with many analysts saying the S&P 500 could have another strong year with the US economy looking likely to avoid a long-predicted recession.

Bank of America, Deutsche Bank, and RBC Capital Markets have all said in recent weeks that they're expecting the gauge to set new record highs in 2024.