The end of the year often marks an uptick for the stock market, with a so-called Santa Rally pushed by brokers offloading dud stocks and buying into performers for a year-end boost. Many on Wall Street say these bullish signals could continue into 2024, with analysts saying they expect to see the S&P 500 topping out at 4700. The famed stock watcher Jeremy Siegel, of the University of Pennsylvania’s Wharton Business School, is one of them, saying the Dow Jones could also be in for an “all-time high” in the coming months. There’s just one thing standing in its way.

Professor Siegel has long been cautious of the Federal Reserve’s approach to rate hikes, often suggesting that the central bank’s chairman, Jerome Powell, needs to adopt an element of flexibility into his approach. And in his comment on Wisdom Tree this week, Professor Siegel once again made the argument for moderation of policy.

The Dow Jones, currently up 9.2% for the year to date and at 36,204 close to its highest level on record, could be held back by the Fed if it remains overly committed to its 2% inflation target, Professor Siegel said.

“The Dow [is] within striking distance of making an all-time high—something I see over coming months,” he wrote. “The primary risk that could knock us off course is a Federal Reserve that remains fixated on inflation fears.”

Thus far the Fed has maintained it will not sway from its pursuit of a 2% inflation target. In November, Fed chairman Powell said: “We remain strongly committed to bringing inflation back down to our 2% goal … The process of getting inflation sustainably down to 2% has a long way to go.”

However, in holding rates at 5.5% instead of increasing them following the last couple of Fed meetings—despite inflation remaining at 3.2%—Powell has suggested some leniency.

A degree of flexibility

Although Powell has signaled no intention of letting inflation sit at a benchmark other than 2%, he has begun to give hints that the Fed’s approach may change.

“We are getting what we wanted to get” out of the economy, Powell said during an event at Spelman College in Atlanta on Dec. 1, adding: “Having come so far so quickly, the [Fed] is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced.”

This has led the Wharton professor to one conclusion: “There will be no rate hike at the next meeting.”

He explained: “The current Powell Fed is not one that wants to surprise the markets. Powell gave a speech on Friday and, if he was looking to hike rates in December, he would have signaled that to the market.”

Professor Siegel hasn’t always been so confident that Fed policies would simultaneously manage to reign in inflationary pressures and keep the economy intact. Indeed, this summer he warned that “YOLO (you only live once) consumers” were propping up the economy.

However, he cautioned that these spenders would soon run out of cash—a theory backed by evidence from Citigroup CEO Jane Fraser—while also predicting that the second half of the year wouldn’t prove a “great time for the markets.” With the S&P 500 up nearly 5% for the past month—and predicted to continue performing well—Professor Siegel is looking ahead to the next stage in the Fed’s plan.

Dare we say cuts?

Murmurings of rate cuts are beginning to rumble through the market as 2024 approaches, as analysts take stock of a more stable market.

Goldman Sachs says it estimates the Fed will cut rates for the first time in Q4 2024, the Bank of America says it’ll be the middle of 2024, while Citi said it expects rate cuts of 100 basis point throughout next year.

Professor Siegel isn’t so convinced. He said the timing of cuts “depends on how weak the data come in and whether inflation continues to come down.”

He added: “One note of caution as you go into the new year and hear more talk of hikes or drops in the Fed funds rate will be after the release of the Dot Plot in December.”

The Dot Plot is a chart released by the Fed based on its economic projections, and illustrates the board’s views on the appropriate pace of policy. It also provides a target range or target level for the federal funds rate moving forward.

Professor Siegel also pointed out that in September the Fed had estimated it would hike rates once more before the end of the year.

The economist quipped: “I suspect social media will be ablaze with comments at how hawkish the Dot Plot reads out. Just remember how good their own forecasting record has been.”

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Original: Fortune | FORTUNE: Jeremy Siegel says the Fed and Jerome Powell could temper Dow returns