DWS Americas Investment Director David Bianco said that as artificial intelligence (AI) rapidly advances, DWS has raised its 12-month target for the S&P 500 index to 5300 points. The increase in their price-earnings ratio forecast is due to the lack of signs of a recession in the U.S. economy after the Fed's rate hikes, with large companies in the S&P 500 index investing heavily to enhance their AI capabilities. It is also expected that software, internet services companies, and tech giants will maintain steady profit growth. Although the benefits of AI will extend to other industries, especially healthcare and finance, it is currently difficult to estimate when its impact will be evident and how deep it will be. DWS still expects the U.S. to cut interest rates by 2024, but there are several factors that could affect the timing and extent of the cuts: inflation has been well above the 2% target for 3 years, job growth is slowing but the labor market remains very tight, first-quarter economic growth in 2024 may reach 2.5%, the federal deficit as a percentage of GDP remains over 6%, and both the stock market and household wealth are at all-time highs. Although market expectations for rate cuts have recently been lowered, the actual timing of the cuts may be later than expected and the extent smaller. It is expected that the Fed will cut rates three times before March 2025. DWS points out that presidential elections are often full of variables, and this year's results may not be known until election day. After the election, the U.S. government will need to address the deficit issue. If Biden wins and the Democrats hold a majority in Congress, it could lead to tax rate hikes, including corporate gains taxes. If Trump wins and the Republicans or populists dominate Congress, it could lead to the U.S. government imposing tariffs. Therefore, the best outcome may be a divided government, requiring both parties to work together to find a balanced approach to repair the fiscal gap.