Blackstone's Byron Wien says the S&P 500 will still rise to 3,000 by year’s end despite the Federal Reserve’s plan to continue hiking interest rates.
"At the beginning of the year, I said the market would reach 3,000 on the S&P 500 and it will do that in spite of Fed rate hikes," Wien told CNBC.
The index closed at 2,915.56 on Tuesday.
Wien spoke before the Fed hiked interest rates on Wednesday and left intact its plans to steadily tighten monetary policy, as it forecast that the U.S. economy would enjoy at least three more years of growth.
In a statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent, Reuters explained.
The U.S. central bank still foresees another rate hike in December, three more next year, and one increase in 2020.
That would put the benchmark overnight lending rate at 3.4 percent, roughly half a percentage point above the Fed’s estimated “neutral” rate of interest, at which rates neither stimulate nor restrict the economy.
The rate hike could lead to stocks falling as it makes it more difficult for companies to borrow money and fuel growth.
However, the U.S. economy "is in a very powerful position right now," the vice chairman at Blackstone said.
Wien said we will "reach 3,000 on the S&P 500, driven by earnings and a strong economy."
Meanwhile, a Wall Street rally collapsed and stocks turned negative shortly before the market close on Wednesday after investors reassessed the Fed’s policy statement and reduced their risk as they weighed how long the U.S. central bank would continue to raise interest rates.
U.S. stocks initially extended gains after the Fed, as expected, raised interest rates and left its monetary policy outlook for the coming years largely unchanged amid steady economic growth and a strong job market, Reuters reported.
But the market reversed course as investors weighed to what degree the elimination of the word “accommodative” from the Fed’s policy statement suggested that the end of a cycle of interest-rate hikes might be in sight.
“People misinterpreted the removal of ‘accommodative’ in the statement,” said Mike O’Rourke, chief market strategist at JonesTrading. “People realized that monetary policy remains on course and there are expectations of another rate hike this year, and they unwound purchases they made on the release of the statement, and also additional de-risking going into the close.”
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