(Reuters) – Deutsche Bank said Monday it expects the S&P 500 to end next year 12% higher, as earnings growth should stay resilient even as the United States experiences a mild and short recession.

Strategists at Deutsche Bank expect the index to end 2024 at 5,100 points. The S&P 500 is up close to 19% so far this year.

Deutsche Bank forecasts earnings for companies in the S&P 500 to rise 10% after factoring in a “mild short” recession.

They expect profits for the index companies to rise by 19% next year if U.S. gross domestic product grows by 2%.

Deutsche Bank’s 2024-end S&P 500 target is 8.5% higher than the 4,700 median forecast of 33 strategists polled by Reuters.

“If earnings growth continues to recover as we forecast, valuations will remain well supported around the top of the range as is typical on the pricing in of a pickup in earnings growth,” the strategists said.

Decline in core inflation to its pre-pandemic levels without growth having to slow could also support the benchmark index, as it would suggest the Federal Reserve would not cut rates unless a recession takes place, they added.

Last week, BofA Global Research said it expects the benchmark to end next year at 5,000 as macro concerns decline and the Fed puts rate hikes on hold.

(Reporting by Roshan Abraham in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)

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