According to an analysis by Societe Generale, which takes into account the history of the financial market over the past 150 years, by the end of this year, the US stock index S&P 500 may collapse by another 24%.
"Our calculations suggest that in order to reach the bottom, the S&P 500 index needs to fall by 40% in the next six months compared to the last maximum recorded in January 2022. Thus, the target level is the mark of 2900. However, a more optimistic scenario assumes a decline in the index to the level of 3150, that is, a drop of 34% relative to the current year's maximum," experts said.
Societe Generale reported that the current forecast range (2900-3150) was calculated using post-crisis market estimates from the 1870s, using quantitative analysis.
"The dynamics of the post-crisis fair value still indicates the need for a deeper correction to bring current prices in line with fundamental fair value," Societe Generale noted, adding that current calculations indicate that the fair value of the S&P 500 index is at around 3020.
The S&P 500 has tumbled about 20% this year amid building recession worries as the Fed began aggressively raising interest rates to combat inflation.