U.S. stocks still on track to gain 10% this year

BlackRock expects U.S. nominal GDP to grow by about 7% in 2022 and corporate earnings to grow by about 12% to 15%. As inflation cools and corporate earnings continue to grow, the U.S. stock market is still likely to rise 10% or more many.

When the pressure that has pushed inflation to a 39-year high will ease and remain sticky, the market will see it move away from these truly extreme levels.

The S&P 500 is down more than 5% so far this year as investors quickly reassess the direction of U.S. interest rates.

Traders now expect the Fed to raise interest rates four times this year.

There could be further volatility before the market calms down, which will depend on whether the Fed is cautious and clear in its exit from stimulus, especially when it comes to trimming some of its balance sheet.