Equity markets continued to rebound on Thursday following the Fed's November policy statement. Although the Fed indicated another rate hike could be necessary to tame inflation, the market cheered because the peak was near. The S&P 500 gained about 2% at the session's high and could continue to advance over the next few weeks. The risk is that inflation is not tamed, and rates will remain high indefinitely. In this scenario, the S&P 500 will be capped by a dwindling outlook for corporate earnings growth.

The consensus estimates for earnings growth in 2024 are falling. The Q1 and Q2 figures are down more than 50% from recent highs and may continue to fall as the year progresses. Consumers are already pinched, and with the holiday season approaching, there is concern that spending will be less than analysts expect. The takeaway for consumers is that discounts and deals are expected to approach the pre-pandemic levels, which were highly favorable to shoppers.