A swift sell-off is ahead once investors realize the banking crisis will tip the economy into a recession, according to Wells Fargo. “We are within spitting distance of our 4200 [S & P 500] target and now shifting direction,” wrote Christopher Harvey, head of equity strategy at Wells Fargo Securities, in a note to clients Tuesday. “Expect a 10% correction in the next 3-6 mos.” The S & P 500 has acted resilient this year in the face of more Federal Reserve rate increases, rising recession fears and the financial shock in March with regional banks. The benchmark added 7% in the first quarter and remains about there, hovering at the 4,100 level this week. “Pre-banking crisis we expected an economic malaise, but now we see a 2H23 recession,” said Harvey in the note entitled, “Sell before May and go away.” “The bank crisis likely will weigh on credit availability and the economy,” he added. .SPX YTD mountain The S & P 500 Index is up about 7% year to date. Harvey pointed to the inversion of the Fed funds rate (4.75% to 5%) with the 2-year Treasury yield (3.981%) as a strong signal that a recession is imminent. He also cited an upcoming profit margin compression as another reason for concern. Investors have been buying up stocks this year, in part because they see inflation peaking and the Fed eventually ending its rate-hiking campaign. History has shown that buying after the Fed hikes rates for the last time has been profitable. But Wells Fargo’s Harvey expects the 7% gain in the S & P is already pricing in this optimism. The strategist sees a typical 10% pullback to around 3,700 on the S & P 500. However, Wells Fargo is maintaining its year-end target of 4,200 on the benchmark. Tech Zone Daily PRO readers can see all the other major Wall Street firms’ S & P predictions by going to our strategist survey , which is updated regularly. —Tech Zone Daily’s Michael Bloom contributed to this report