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Wall Street sees gray skies ahead for equities as Fed tightens policy

Kitco News

May 24 (Reuters) - With inflation in the United States running at levels not seen in four decades, market participants worry the Federal Reserve has fallen far behind the curve and will need to move aggressively to bring down the prices, which might end up tipping the economy over into a recession.

These concerns have led to a rout in U.S. equities in recent months, and prompted banks to roll out bearish forecasts.

Here are some estimates from major banks on the possibility of a recession in the United States:

Bank
Commentary on recession
New year-end price target for S&P 500
Old PT
Goldman Sachs
Estimate a 35% chance of a recession in U.S. in next two years
4,300
4,900
Barclays Plc
Risks to S&P 500 "remain firmly stacked to the downside" given numerous negative near-term catalysts
4,500*
4,800
Wells Fargo
Expects mild U.S. recession at the end of 2022, early 2023; also cuts year-end 2022 GDP growth target to 1.5% from 2.2%.
4,200-4,400
4,500-4,700
Morgan Stanley
Says there is a 25% probability for a recession in next 12 months
3,400*
Bank of America Corp
Sees recession risks as "low for now but elevated for 2023"
4,500
4,600
Credit Suisse
Believes there is a high recession risk for U.S. in the second half of 2023 and for Europe this year
As low as 3,350 in bear-market scenario
JPMorgan Chase & Co
Says equity markets pricing in too much recession risk; Advocates risk-taking in U.S. and Euro area equity markets
4,900*
5,050
HSBC Holdings PLC
Expects a severe slowdown in global growth momentum
in Q2 and Q3
4,450
4,900
Deutsche Bank AG
Sees no recession imminently, but warns a prolonged market sell-off risks sliding into a self-fulfilling recession
4,750
5,250

Source: Research notes from banks, *media reports

Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri
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