JPMorgan's model suggests S&P 500 crash to 4320 if macro volatility remains high
The analysis indicates that if macro volatility stabilizes at higher rates, the fair value for the S&P 500 would be around 4,320.
The model suggests that, unlike bonds, policy rates do not directly impact the fair value framework for equities. However, a prolonged environment of high policy rates could disrupt the low macro volatility seen in the past year, influencing the S&P 500's valuation. For bonds, JPMorgan's long-term fair value framework for real 10-year U.S. Treasury yields indicates that current real yields of around 2.1% are aligned with economists' baseline predictions.
If the Federal Reserve does not implement cuts by the end of 2024, the model projects real yields could rise to 2.4%.
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