Wells Fargo: A double-digit market rally is coming

A monster rally for the stock market is coming, Wells Fargo’s head of equity strategy, Chris Harvey, told CNBC on Thursday.

He says the recent sell-off has unlocked value and created a “great opportunity.”

“People act as if this was a spectator sport, not a contact sport. We want people to pick up that value,” Harvey said on “Fast Money.”

In fact, he sees a double-digit gain for the S&P 500 by the end of 2019. His current price target for the index is 3,079 by the end of next year, a 12 percent upside from Thursday’s close.

“Here we are having the opportunity to have double-digit returns. You have to act on it. You have to buy that value. You have to take on some risk,” he said.

However, he said it should be viewed as a trade. Therefore, when the market goes back up, risk should be taken off again, Harvey cautioned.

U.S. stocks closed higher on Thursday, the first trading day of November, after President Donald Trump suggested that trade talks with China are progressing.

The Dow Jones Industrial Average ended 264.98 points higher, while the S&P 500 rose 1.1 percent. The Nasdaq Composite gained 1.8 percent.

However, it was a rough month for stocks in October, thanks to worries about rising interest rates and trade tensions between the U.S. and China. There was also concern that earnings growth may be slowing down.

The Dow ended the month down 5.1 percent, its biggest one-month fall since January 2016. The S&P 500 lost $1.91 trillion in October, according to S&P Dow Jones Indices analyst Howard Silverblatt. It was the worst month for the S&P 500 since September 2011.

Harvey suggested being diverse but aggressive. He likes technology, financial and consumer stocks.

— CNBC’s Fred Imbert contributed to this report.

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