S&P 500 ($SPY) Will Still Hit 3,000 Despite Fed Rate Hikes
Blackstone’s (NYSE:BX) Byron Wien says the S&P 500 will still rise to 3,000 by year’s end despite the Federal Reserve’s plan to continue hiking interest rates.
“At the beginning of the year, I said the market would reach 3,000 on the S&P 500 and it will do that in spite of Fed rate hikes,” Mr. Wein.
The benchmark index closed at 2,915.56 Tuesday.
Mr. Wien spoke before the Fed’s FOMC hiked interest rates Wednesday and left intact its plans to steadily tighten monetary policy, as it forecast that the US economy would enjoy at least 3 more years of growth.
In a statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight fed funds rate by a Quarter of a percentage point to a range of 2.00 to 2.25%
The Fed foresees another rate hike in December, 3 more in Y 2019, and 1 increase in Y 2020.
That would put the benchmark overnight lending rate at 3.4%, roughly 1/2% above the Fed’s estimated “neutral” rate of interest, at which rates neither stimulate nor restrict the economy.
The US economy “is in a very powerful position right now,” Me. Wein said.
He went on to say we will “reach 3,000 on the S&P 500, driven by earnings and a strong economy.”
People misinterpreted the removal of ‘accommodative’ in the statement, as they realized that monetary policy remains on course and there are expectations of another rate hike this year, and they unwound purchases they made on the release of the statement, and also additional de-risking going into the close Tuesday.
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