Market sentiment turns cautious as analysts warn of a potential rate-hiking cycle, prompting downward revisions to S&P 500 targets amid concerns over inflation and seasonal weakness.
Yardeni cut the S&P 500 year-end target to 7,900 and BofA sees a pullback due to expected additional Fed rate hikes.
Higher-for-longer oil prices are cited as a risk pushing bond yields higher and entrenching inflation.
The article notes a strong dollar as a drawback for markets, implying continued dollar strength.
Wall Street strategists are recalibrating expectations as the Federal Reserve signals a potential cycle of additional rate hikes to combat entrenched inflation. Veteran analyst Ed Yardeni lowered his S&P 500 year-end target to 7,900, citing risks from elevated oil prices and rising bond yields that threaten to dampen market momentum.
Analysts fear the Fed may initiate a prolonged rate-hiking cycle to force demand destruction and curb inflation, which could pressure equity valuations and increase bond yields.