Bloomberg Creative/Getty, Drew Angerer/Getty, Tyler Le/BI
The S&P 500 might be stuck in place for the rest of the year, Ed Yardeni says.
The market vet thinks no more Fed rate cuts are coming until 2025 as the economy stays strong.
US government debt will also continue to rise, limiting the Fed’s ability to cut rates, he said.
The stock market could be bumping up against a ceiling for now, market veteran Ed Yardeni said.
The longtime investor and president of Yardeni Research said he sees limited capacity for central bankers to cut interest rates, thanks to the strength of the US economy and a troubling outlook for the federal debt balance.
That means further policy easing may not come until 2025 — and the S&P 500 could stay stuck around 5,800 through the end of the year, he said in a recent note to clients.
That would imply less than a 1% gain for the benchmark index in the next two months.
Stocks have already been going “nowhere fast” since the Fed issued a jumbo-sized rate cut in September, Yardeni said. The S&P 500 has climbed 2% since the Fed’s last policy meeting, while the S&P 500 equal-weighted index has risen 3.8%.
“We expect that it might go nowhere fast over the rest of this year too, hovering around 5,800. The outlook for fiscal policy will probably remain unsettling after the election and the Fed might not lower the FFR over the rest of this year after all,” Yardeni wrote.
Yardeni pointed to strength in recent economic data, which suggests that further rate cuts might not come out of the Fed’s meeting this week or in December.
For one, real GDP growth was strong in the third quarter, rising 2.8% year-over-year.
Business equipment investment rose 11% over the third quarter, following a near-10% increase in the prior quarter. Investment in information processing equipment, in particular, hit a record high, according to data from the Bureau of Economic Analysis.
Business equipment investment continued to rise over the third-quarter.LSEG Datastream, Yardeni Research, Bureau of Economic Analysis
Weakness in the job market has…
..
