Analysts who correctly predicted stock market rally earlier this year now say S&P 500 won't exceed 4400 until 2Q24
Stifel strategists, who accurately predicted the rally in the first half of this year, believe that U.S. stocks reached their peak in the summer and are unlikely to surpass the mid-4,000s until at least April 2024.
“It is not “Fed high for longer,” but rather the Fed is returning to ‘policy modulation at normalized rates’ (we'll call it 1990s-lite),” the analysts wrote in a note.
The analysts attribute this projection to the high price-to-earnings ratio and modest 2024 earnings, as well as an anticipated normalized 5-6% yield on 10-year U.S. Treasuries in the mid-2020s, which could exert pressure on P/E ratios.
They characterize the current market conditions as the «fourth secular bear market» of the past century. The analysts expect the 2020s to be a flat and range-bound decade for the S&P 500.
“We see a “Secular Bear Market Lite” from the recent peak Dec-2021 (~4,800 for S&P 500) to about 2030. In past Secular Bear Markets the S&P 500 was flat/range-bound for about a decade, but well over a decade (average 24 years) in real (CPI-adjusted) index price terms,” they added.
S&P 500 closed at 4,224 on Friday.
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