Rising yields have weighed on equities as investors priced in expectations of “higher-for-longer” central bank policy rates. (ddp)

Overall, we have a neutral view on global stocks, and favor areas of the market that have lagged this year's rally.


The stock rally has run into headwinds in recent months.

  • The S&P 500 has fallen by around 5% since its recent peak in late July.
  • Rising yields have weighed on equities as investors priced in expectations of “higher-for-longer” central bank policy rates.
  • Yet the S&P 500 was still up 13% year-to-date as of 12 October.

But US economic growth and corporate earnings have shown resilience.

  • US inflation has moderated, while GDP growth accelerated to 2.4% in the second quarter.
  • Healthy economic and labor market activity should drive a good US earnings season. We expect S&P 500 earnings per share (EPS) growth of 3–4% in 3Q—a return to profit growth for the first time in three quarters.
  • We forecast 9% EPS growth for the S&P 500 in 2024.

We are neutral on global stocks but favor laggards

  • Uncertainty about the monetary policy outlook may keep global equities choppy and range-bound in the near term.
  • Within US equities, we prefer equal-weighted indexes to cap-weighted ones.
  • Investors looking to re-engage in stock markets should consider laggards like emerging markets, the value style, and select opportunities in the Eurozone and Switzerland. Structured solutions may also offer exposure to potential gains with some capital preservation features.

Did you know?


  • The capitalization-weighted S&P 500 has climbed 13% year-to-date to 12 October, driven primarily by a handful of mega-cap growth stocks.
  • The equal-weighted S&P 500 has lagged, and has been flat year-to-date.
  • The equal-weighted S&P 500 index holds a higher share of two of our most preferred US sectors—consumer staples and industrials—than the cap-weighted index.

Investment view

We are neutral on global stocks but see value in areas of the equity market that have lagged this year's rally, including emerging markets and value stocks. Our preferred global equity sectors are energy, consumer staples, utilities, and industrials. We favor equal-weighted US indexes relative to cap-weighted ones. Our S&P 500 targets are 4,500 in June 2024 and 4,700 in December 2024.


Main contributors - Vincent Heaney, Christopher Swann


Original report - What's next for equity markets?, 13 October 2023.