The S&P 500 posted its worst week since 2020. The index could tumble as low as 2525 on a 70’s stagflation backdrop, economists at Société Générale report. 

S&P 500 may go to 3300 before bouncing back later in the year

“Our downbeat thesis for US Equities reflects the following factors: a) Fed hikes are taking place in a slowing growth environment, and b) we have never seen hikes and quantitative tightening in the same year.”

“We see S&P 500 fair value at 3850 points, with a volatile profile. The index may go to 3300 before bouncing back later in the year.”

“We do not factor in a recession or stagflation as a base case, but a typical recession would lead the S&P 500 down to 3200 while a 70’s style stagflation backdrop could push the index to 2525.”