We shift our S&P 500 Index target of 4,750 in 3Q23 to year-end 2023 (from 4,300) as the no-landing scenario is not yet priced in and should be over the coming months as recession calls are deleted/delayed. Put another way, we stay bullish near term, despite the likely jitters in 2024.

We expect a 15% shock in the S&P 500 in 2Q24, likely driven by a contraction in US consumer spending. However, with a return to 5% nominal GDP growth in 2025e, the S&P 500 should recover. Our index targets are supported by our equity risk premium projections, which assume: 1) bond yields will come down to 3-3.5% in a soft recession; and 2) aggressive Fed rate cuts in the middle of 2024.