Trouble may be brewing in the second half of this year, but there’s “a window” for a stock-market rally during the first six months of 2023, in the view of Stifel chief equity strategist Barry Bannister.
All of that should add up to a lower real yield on the 10-year U.S. Treasury note and the S&P 500 index rising to 4,300 by the end of June, the note shows. Stifel’s earnings-per-share forecast for the S&P 500 features a “major” slowdown in the second half of the year, he said in the note. “Additionally, inflation may turn back up late-2023, causing the Fed to re-tighten financial conditions.”
The S&P 500 SPX was up 0.5% in Tuesday afternoon trading, while the Dow Jones Industrial Average DJIA gained 0.4% and the technology-laden Nasdaq Composite COMP rose 0.8%, according to FactSet data, at last check. The U.S. stock market is up so far this year, after tumbling in 2022 as the Fed raised its benchmark rate to battle the highest inflation in four decades. The S&P 500 has edged up around 1.9% this month, following a 19.4% drop in 2022 for the index’s worst year since 2008, FactSet data show, at last check.
It took 16 months for inflation to rise to last year’s June peak on a year-over-year basis, according to Bannister, who said Stifel’s measures point to it taking around 16 months to fall to 3.5%.