The S&P 500 Index fell 3.4% on Friday. With rates likely to stay higher for longer, economists at UBS see limited upside for the S&P 500 in the near-term.

Fed will raise rates by another 100 bps by year-end

“We maintain our view that the Fed will raise rates by another 100 bps by year-end, with risks for more if inflation does not slow in line with our forecasts.”

“With rates likely to stay higher for longer, our base case is for further volatility, earnings downgrades, and higher-than-expected default rates over the course of the next year.”

“Our price target for the S&P 500 in June 2023 is 4,200, versus 4,057 as of Friday’s close, with the 10-year Treasury yield at 2.75%, compared to 3.03% at present.”