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The S&P 500's recent 2.6% surge signals a bear-market bottom and the dawn of a new bull cyclebut Evercore ISI's Julian Emanuel warns it won't be a straight line to the moon, but rather a choppy, back-and-forth grind.
Emanuel draws parallels between today's tariff-tinged volatility and the shockwaves sent by Long-Term Capital Management's collapse in 1998. Back then, the Fed swooped in with rate cuts that propelled stocks to fresh highs almost overnight.
Today, however, inflation remains stubbornly above target, the Fed is content to sit on its hands, and policy reversalsfrom Trump's pause on tariffs on April 9 to the U.S.China dealhave only just begun to ripple through corporate supply chains. That 21.3% bear-market low feels more like a reset button than a launchpad, with headline risks still looming large.
Rather than another Goldilocks rebound, Emanuel sees the S&P 500's path as a process marked by volatility. He expects tariff levels to land around 15%17%well below Trump's initial 80% pitch but still lofty by historical standardsand to remain a source of episodic risk.
With no fast-track to dovish central-bank action and sticky inflation to keep yields elevated, each leg higher in equities may be met by profit-taking and policy anxiety. Evercore ISI's year-end target of 5,600 on the S&P 500 assumes a gradual grind upward into 2026 as markets adjust to a new normal of slower growth and policy uncertainty.
Why it matters: Investors should brace for a bull market that rewards patience and tactical shifts more than buy-and-hold faith, as intermittent headlines on inflation, tariffs or Fed policy will likely trigger swift market pivots.
This article first appeared on GuruFocus.