A snippet via RBC on the Fed and the US equity benchmark S&P 500 index.
RBC cite their base model, which eyes consensus forecasts of economic variables, which indicates that the S&P 500 should trade at around 21.5x earnings by the end of 2024
- this would place the index around 5100 to 5300 if their earnings per share (EPS) forecast of $237 for 2024 plays out
RBC though also examine the case where there are no Fed rate cuts during 2024 due to higher-than-expected inflation, and 10-year Treasury yields not rising above 5%:
- P/E ratio could drop to 20.8x
- resulting in the S&P 500 dropping to a range of 4900-5100
