Oct 16 Reuters UBS said it now expects the SP 500 to hit 4,700 points only by December 2024, instead of the middle of the year as it forecast earlier, due to expectations of higherforlonger U.S. interest rates.

The brokerage, in a note dated Oct. 13, said it now expects the benchmark index to hit 4,500 points by mid2024, which implies an increase of about 4 from current levels.

The delay … is primarily related to the recent rapid move higher in interest rates and … expectations that interest rates will remain higher for longer, said David Lefkowitz, head of chief investment office, U.S. equities, UBS.

The Federal Reserve has raised the benchmark interest rate by 525 basis points since it started its aggressive battle against inflation in March last year.

The fear of higherforlonger rates has pushed the SP 500 down about 6 from this year39;s highs hit late in July. Still, the index has clocked a 12 gain so far this year to close at 4,327.78 points on Friday.

We still expect a softish landing in the U.S. economy, which should drive a recovery in earnings growth and close to a doubledigit total return in U.S. largecap stocks over the coming year, said Lefkowitz.

While valuations are high relative to history, they are reasonable in the context of low unemployment and falling inflation.

Reporting by Reshma Rockie George and Susan Mathew in Bengaluru; Editing by Savio D39;Souza

Source Reuters