Stifel’s chief equity strategist, Barry Bannister, warned that the stock market’s “no recession relief rally” is over.

According to a report from Business Insider, Bannister suggests the strong stock market rally seen in the current year’s first half has concluded and forecasts a muted return for investors till the end of 2023.

“The lagged effect of past policy tightening, persistent Fed vigilance… the risk of a moderate oil shock and movement closer to full resource utilization in the economy raise the risk of a classical, albeit mild U.S. recession in early 2024,” he mentioned.

Bannister’s view is also influenced by the Federal Reserve‘s commitment to reducing inflation back to its long-term target of 2%, even though it’s currently nearing 3%. He suggests more effort would be required to lower inflation from around 3% to 2%.

The S&P 500 index has seen a year-to-date increase of approximately 17%. However, it has declined by about 3% since August began. Bannister predicts the S&P 500 to close the year at 4,400, indicating a potential downside of about 2% from present levels.

“If our flattish EPS view is right the S&P 500 may be flat,” Bannister said.

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