After another hawkish Federal Reserve statement , what's next for earnings? The main argument for a rally into the fourth quarter — that the Fed will not keeping raising rates into 2023 — has been undermined. Higher Fed funds rate forecasts for both 2022 and 2023, and no reduction in rates until 2024 is not what bulls wanted to hear. Both metrics for determining future stock prices (earnings estimates and the market multiple) could now move in a very wide "band". What's it all mean? A wide range of outcomes implies more uncertainty, more volatility. Projections on market prices are based on models. Change the numbers and the models change. For example, what is the right earnings estimate for the next twelve months for the S & P 500? The current consensus for 2022 earnings is $225 and $243 for 2023, both well above the $208 print for 2021. But in a recession, those 2022 and 2023 numbers could easily slip into below-2021 territory. So is the right number $225 for 2022? Or $200? Same question for 2023. "S & P 500 EPS estimates will likely be coming down at increasing rates in the weeks ahead," Nick Raich, who tracks corporate earnings at Earnings Scout, told me. The multiple (P/E ratio, the value it puts on a future stream of earnings) also has a wide range of outcomes. "The multiple has room to shrink at least to more historic levels as growth moderates and interest rates rise," Lindsey Bell, chief markets & money strategist at Ally, told me. It too has swung in a wide range, from 16 to 21 times forward earnings this year, but in a recession, multiples can go as low as 13-15 times forward earnings. The wide outcomes can give you drastically different estimates for the S & P 500. Suppose you are optimistic, and think the S & P 500 should trade for 17 times forward earnings, and you have an estimate of $232 for the next 12 months. 232 x 17 = 3,944 for the S & P 500, more than 150 points above where it is now. But most are not so optimistic. Put a more reasonable multiple of 15 times and $200 in earnings (which would be below 2021 numbers), and you have 3,000 for the S & P. That is a 1,000 point difference between moderately optimistic and fairly pessimistic. That is a very wide range. Jeff Gundlach, speaking to our Scott Wapner last night , conceded that the Fed statement was hawkish and that it was possible the S & P 500 could move toward 3,400 and, "if things get real bad, to 3,000." The bull interpretation is that peak tightening is almost here and that should be good news for risky assets. "The economic environment laid out in the SEP (slower growth, stabilizing rates, declining inflation) is favorable for Growth/GARP styles. On rates, the market is almost there, and the Fed is sprinting to play catch up but not for much longer," Chris Harvey at Wells Fargo said in a note to clients. Powell did throw a bone to bulls in his presser: "At some point, as the stance of monetary policy tightens further, it will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation." When will stocks bottom? "When the worst of the revisions occur, the bottom in stock prices will be in +/- 3 months," Nick Raich told me.