Economists at Société Générale believe that the S&P 500 should be trading in a wide range of 3,500 to 4,000. Ultimately, they expect the S&P 500 to end 2023 at 3,800. 

US Equities not cheap yet

“The US equities risk premium is currently below average despite having declined this year, and we put the S&P 500’s fair value at 3,650 based on our inflation moderation valuation framework. But for 2023, we expect EPS to decline in 1Q23, a Fed pivot in 2Q, China’s reopening in 3Q and rising US recession risk in 4Q. These factors should see the S&P 500 trade in a wide range of 3,500-4,000 at somewhere around our 3,650 fair value number.”

“Ultimately, we expect the S&P 500 to end 2023 at 3,800.”