By Caroline Valetkevitch

NEW YORK (Reuters). Wall Street strategists anticipate that U.S. stocks would end 2022 higher than current beaten-down levels, but others warned of turbulence due to concerns about inflation and aggressive rises in interest rates crimping economic growth.

According to the average forecast from 43 strategists polled over approximately the last two week by Reuters, this benchmark will close at 4,400 in the year’s end. This would represent a 10.7% increase over Monday’s close.

But strategists have been revising down their year-end forecasts after the recent sharp sell-off, including Credit Suisse Securities, which cut its year-end S&P 500 target to 4,900 from 5,200 earlier this month.

The S&P 500 is down more than 16% since the start of the year, with the war in Ukraine and COVID-19-related lockdowns in China adding to the long list of worries for investors.

The index was close to concluding that it had been in a bearish market since Jan. 3, when it hit a new record. According to common definitions, closing down 20% would mean that the index has been in bear market ever since it reached its peak.

That would be the S&P 500’s second bear market since the 2020 global sell-off caused by the coronavirus pandemic. Nasdaq has been the leader of market fall and is now down 30% from November 2021’s all-time high.

The poll found that slightly more strategists believed volatility would increase rather than decrease in the upcoming months.

Cboe Volatility Index is also known as Wall Street’s fear gauge. It is currently at 29.

Paul Christopher (head of global market strategy) stated that “the market is trying decide whether there’s going be a depression later in the year.” Wells Fargo (NYSE:) Investment Institute St. Louis.

He stated that inflation and the Fed “are like a dial” which has been increasing economic pressure. “By the year’s end, inflation should have fallen from its current level and will continue to fall. The direction of the trend will be obvious.” Wells Fargo expects the S&P 500 to end this year at 4,300.

Fed promised to continue raising U.S. rates of interest until inflation is controlled.

Major U.S. retailers reported last week disappointing corporate results. Walmart (NYSE:) also cut its full-year outlook.

“These retail earnings reports from last week were pretty indicative – you have a strong customer, but they are changing their shopping habits now,” stated Anthony Saglimbene (NYSE:), global market strategist for Ameriprise Financial.

He said that consensus Wall Street projections of profit growth for this year were still far too high given the current inflation outlook and rates.

S&P 500 earnings are estimated to grow 9.3% in 2022 from a year ago, and that estimate is up from 8.8% at the start of April, according to IBES data from Refinitiv.

However, the valuations of some markets have fallen since the beginning of the year and analysts say this is making certain areas more attractive.

The S&P 500’s forward 12-month price-to-earnings ratio is down to 16.6 from 22.1 at the end of December and is near its long-term average of about 16, based on Refinitiv data.

Saglimbene declared that “technology is growing more attractive.” There are many opportunities in high-quality tech now, even though there is more pain.

According to the poll, they will end the year at 34.500. This is 8.2% more than Monday’s close.

(Other stories taken from the Reuters Q2 global Stock Markets poll package: