The stock market has rallied on reports of the consumer price index (CPI) and the producer price index (PPI) showing signs of a slowdown. However, experts are concerned about the overexcitement surrounding the inflation figures. Since inflation is still way above the Fed’s 2% target, interest rate hikes are expected to continue for some time.
Although the recent stock market rally suggests that the Fed might be able to achieve a soft landing, an economic slowdown might still be on the cards. Risks to growth and earnings indicate that the stock market could experience another fall. Capital Economics expects the S&P 500 to fall to a 3,200 trough by the middle of 2023.
