“When you’re making a transition away from the Fed being the primary driver to corporate profits and a growing economy, it’s more muted returns,” Emanuel said by phone on July 10. “Stocks will pause or set back a little.”
Relatively expensive valuations will also limit future gains, according to Garry Evans, HSBC’s global head of equity strategy in Hong Kong. He said in a report last week that the S&P 500 will finish the year at 2,000, a 1.6 percent gain from last week’s close. The index trades at 16.6 times projected earnings, near the highest level in four years, data compiled by Bloomberg show.