By Lewis Krauskopf
NEW YORK (Reuters) – After a “relief rally” in the first half of 2023, the S&P 500 is set to remain largely flat through the end of the year as inflation keeps monetary policy tight, Stifel equity strategists said on Wednesday.
The S&P 500 has rebounded 16.4% so far this year after plunging in 2022, as the economy has so far defied fears of a downturn.
“We believe the relief rally that was predicated on ‘no recession in 2023’ is now over,” Stifel equity strategist Barry Bannister said in a note.
Bannister projected the S&P 500 would “trade sideways” in the second half of 2023 and end the year at around 4,400. That is 1.5% below the index’s closing level of 4,467.71 on Wednesday.
While inflation has been moderating, Bannister said he expected the consumer price index to end 2023 at around 3.5%, versus a 2.3% average in the 30 years before the COVID-19 pandemic. The inflation rates would result in “keeping Fed tight and S&P 500 flat” in the second half, Bannister said.
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(Reporting by Lewis Krauskopf; editing by Jonathan Oatis)