RBC Capital Markets Strategist Lori Calvasina raised her year-end price target for the S&P 500 to 5,150 while warning that 'the weak start in January is just the beginning of a phase of turbulence.'

In a note to clients, Calvasina wrote, "When we introduced our 5,000 target back in mid November, it represented a gain of roughly 10% from levels in place at that time. Today, our 5,150 price target represents a gain of 8% vs. the index’s December 2023 close, making it fair to say our enthusiasm has actually come down a bit."

Calvasina favors value and small caps in the year ahead and warned of 'a number of problems' for the large cap growth trade.

Yahoo Finance Head of News Myles Udland joins the Live show to discuss the latest development and what it could mean for the markets going forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino.

Video Transcript

SEANA SMITH: The stock's off to the worst start that we've seen since 2016. We had the S&P 500 down about 1 and 1/2 percent going into today's trading day. Now, despite all of this and some of the worrisome signs out there, RBC Capital market strategist Lori Calvasina out with a new note this morning raising her year-end target for the S&P to 5,150. That's up from her initial view of 5,000.

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Our very own Myles Udland is here to break all of this down. And Myles, you were on with us a couple of times last week, just talking about some of the negative sentiment in the market over the last several days. Yet, Lori saying, there's still reason to believe.

MYLES UDLAND: I think my favorite part of this call is it's actually a slight downgrade for RBC's view relative to where it was set in November. So when they came out with their 5,000 price target in November, it implied about a 10% increase in the stock market in 2024, given the gains we've seen. And this is really the theme of all of our conversations last week, Seana was, given the gains we saw at the end of 2023, how does that shape the 2024 outlook?

So now, RBC's are looking for 8% gain. And it's a tough needle to thread I think for a lot of Wall Street strategists. And we've seen this is the third, fourth strategist who raised their year-end price target in just the last couple of weeks. So I think it's an odd game trying to figure out where stocks are going to be in a year.

And we all know the data that 10% average return, but rarely do you actually see a 10% return for the S&P. So it's going to be some challenges, I think, for strategists over the coming year. But really looking at a downgrade of the market, though, you have an increase in the price target. And it really comes down to how much multiple expansion does RBC and other strategists-- how much do they think is left in the market. You're still looking at about 22 times forward earnings at the end of next year, which is where we ended 2023.