Fed's monetary policy poses risk to the bull market: Strategist

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Matthew Palazzolo News

Federal Reserve,Earnings Growth,Bull Market

Wall Street is approaching the two-year anniversary of the bull market (^GSPC). Matthew Palazzolo, Bernstein Private Wealth Management senior investment...

). Matthew Palazzolo, Bernstein Private Wealth Management senior investment strategist, joins Catalysts to discuss the outlook for the market as the Federal Reserve eases interest rates.

It's our expectation that the Federal Reserve will continue to cut rates throughout the rest of this year into 2025 and probably get the FED funds rate down to about 3% which would be a fairly conducive environment for equity investors. And, you know, if you look at valuations that, that's supportive of that and the, the leadership that you've seen over the last couple of years, those companies are, are fairly expensive.

We think the major driver of equity market returns is really gonna come down to earnings growth, consensus earnings growth next year or for something like 10% which we think is probably a tad bit optimistic.And so if you get no movement in pe multiples and the market just moves on earnings growth, you're looking at something like a mid single digit return, which again, after 2023 and 2024 that's not so bad.

 

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