This analyst still sees a 23% upside in the S&P 500 index

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Inflation, rate hikes, tightening, the rising geopolitical tensions – there’s plenty that could hurt the stock market this year but BMO Capital Markets’ Brian Belski is still convinced the U.S. equities will end 2022 on a bullish note.

Belski has a year-end target of 5,300 for SPX

Belski expects the S&P 500 index to end the year at 5,300 that represents a 23% upside from here. He concurs the U.S. government bond yield curve has flattened on talks of aggressive rate hikes, but says the fear of recession is overblown.

Despite common perceptions, flatter yield curves have actually been better for stocks than steeper ones. S&P 500 has averaged a 10.8% annualised gain during past periods of prolonged curve flattening.

Also on Tuesday, IHS Markit said U.S. economic activity bounced back in February on easing omicron, but the benchmark slid another 2.0% as Russia moved closer to invading Ukraine.

JPMorgan’s Mislav Matejka agrees

Belski, however, is not the only one who isn’t threatened by the flattening yield curve that is usually seen as an indicator that the economy will cool off. JPMorgan’s Mislav Matejka also has a similar outlook. In a recent note, he wrote:

The start of policy tightening is, the vast majority of times, a confirmation that the cycle has legs, rather than the signal of its end.

As inflation hit a 40-year high in January, analysts at the world’s largest investment bank now see a need for as many as nine rate hikes this year, making Phil Palumbo suggest that investors stick with “selling the rip” in 2022.

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