S&P 500 seen dipping between now and year-end

NEW YORK, May 23 (Reuters): The S&P 500 index of US shares will slip marginally between now and year-end as past interest rate hikes, troubled regional banks and weak earnings weigh on sentiment, according to strategists in a Reuters poll.
They see the benchmark index ending the year at 4,150, down slightly from Monday's close of 4,192.63, but still up about 8 per cent from the end of 2022, based on the median forecast of 43 strategists polled by Reuters during the last two weeks.
Given the myriad risks to the market, including a possible US debt default, 12 of 15 strategists who answered a question about the outlook for stocks said trading will be range bound in the coming three months.
"It's just a very uninspiring, low-growth backdrop, with tight monetary policy and earnings that will be down this year versus last," said Jonathan Golub, head of US equity strategy and quantitative research for Credit Suisse, whose year-end target for the S&P 500 this year is 4,050.
The S&P 500 is up about 9 per cent so far in 2023 after falling 19.4 per cent in 2022.
Gains this year are largely thanks to big growth and technology stocks, which have rallied as other areas of the market have faltered, like regional banks.
The S&P 500 communication services sector is up 32 per cent for the year to date, while technology is up about 28 per cent.
But the recent collapse of Silicon Valley Bank and a few other regional banks has led to concerns banking instability will hurt US companies that rely on loans from these smaller banks.
Investors are weighing the likelihood the Federal Reserve's aggressive approach to raising interest rates will push the economy into recession.
Golub said while he does not see a recession ahead, he expects companies to face margin pressure from higher wages, which could result in layoffs.
The latest poll forecast for the S&P 500 is down slightly from the 4,200 year-end 2023 target in a February Reuters stocks poll.
To be sure, some strategists are adjusting their targets upward. Savita Subramanian, equity and quant strategist at BofA Securities, this week raised her S&P 500 year-end forecast to 4,300 from 4,000.
S&P 500 companies are still expected to have had a second straight decline in quarterly earnings in the first quarter, or a US "earnings recession," which last occurred when COVID-19 hit corporate results in 2020, based on Refinitiv data.
Analysts are forecasting full-year profit growth for 2023 of just 1.2 per cent.