Fed’s Powell sees more rate hikes ahead: ‘there’s still room’ in stocks

S&P 500 is in the red this morning after Chair Jerome Powell reiterated that the Federal Reserve may not be done with raising rates just yet.

Craig Johnson still remains bullish on stocks

On Wednesday, Chair Powell confirmed that more rate hikes were likely if inflation remained materially above the 2.0% target.

Still, Craig Johnson of Piper Sandler remains constructive on the U.S. stocks for the rest of the year. On CNBC’s “Worldwide Exchange”, he said:

When you get that last hike to before you get the first cut, markets have historically moved higher. That’s what I think you’ll ultimately see happen through the rest of this year.

Johnson does not expect the central bank to start cutting rates any time soon. For the year, the benchmark index is up nearly 15% at writing.

S&P 500 could hit 4,625 by the end of this year

Last week, the FOMC opted to skip a rate hike but official signalled two more rate increases ahead as Invezz reported here.   

On the plus side, inflation in the United States has cooled off significantly from its peak of 9.1% in June of 2022 to 4.0% last month (read more). According to the Chief Market Technician of Piper Sandler:

Historically, from January through June, when you got better than 8.0% return, you’ve typically seen positive returns for the full year, mostly in mid-20s. So, there’s still more room.

Craig Johnson expects the equities market to hit 4,625 by the end of this year that translates to another 6.0% upside from here.