Wall Street’s 2023 outlook for stocks

This post was originally published by TKer.co

It’s that time of year when Wall Street’s chief strategists tell their clients where they see the stock market going in the coming year.

Typically, the group’s average forecast predicts an S&P 500 rise of about 10%, which is in line with historical averages.

At this point, the advantages are Unusual caution with The most expected The S&P is lower than it is today until the end of 2023.

There are hundreds of pages of research and analysis that accompany these strategists’ predictions. The general theme: Most Wall Street firms expect the US economy to enter a recession by 2023. Many believe that earnings forecasts for 2023 have plenty of room for downside. In the year of 2023. At the same time, many expect an unequivocal drop in inflation, giving the Federal Reserve clearance to ease its hawkish monetary policy stance. At least some strategists predict that if economic conditions deteriorate significantly, the Fed may even return to cutting interest rates.

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Wall Street in 2010 In 2023, he is unusually skeptical. (Image: Getty)

Putting it all together, strategists expect a choppy first half to be followed by a lighter second half, which should send stocks slightly higher.

Below are the 16 overall S&P 500 predictions for 2023, including highlights from strategists’ comments. The targets range from 3,675 to 4,500. The S&P closed at 4,071 on Friday, indicating a return of between -9.7% and +10.5%.

  • Barclays: 3,675, $210 EPS (as of November 21, 2022). However, current multiples are baking in inflation and an eventual soft landing, which we believe is a low probability.

  • Societe Generale: 3,800 (as of Nov. 30) “Not as depressed as 2022, but the profile of returns should be much better in 2023 as Fed hikes near the end of this cycle. Our ‘hard-soft-landing’ scenario projects EPS growth to 0% in 2023.” We expect the index to trade broadly as we see negative earnings growth in 1H23, a Fed pivot in June 2023, China reopening in 3Q23, and a US recession in 1Q24.

  • Capital Economics: 3,800 (as of Oct. 28) “We expect global growth to disappoint and the world to enter recession, causing more pain for global equities and corporate bonds. But we don’t expect a particularly prolonged downturn: mid-2023 or the worst may be behind us.” Risky assets may and may begin to regroup in a more sustainable manner in our view.

  • Morgan Stanley: 3,900$195 EPS (as of Nov. 14). We see the -3,300 price pool depreciating.

  • UBS: 3,900, $198 EPS (as of Nov. 8) “For Q2-Q4 2023, UBS economists forecast a U.S. recession, with the 2023 setup essentially easing inflation and financial conditions, and It’s a race between growth + revenues. History shows that before financial conditions materially ease, growth and earnings will continue to decline towards market paths.

  • City: 3,900$215 EPS (as of November 18). As it works to exit, the monetary policy push to lower rates raises multiples.

  • BofA: 4,000$200 EPS (as of November 28). 3000 will be earned by pressing our symbol.

  • Goldman Sachs: 4,000, $224 EPS (2020) US stocks perform in 2022 painful bearish but 2023 equity story EPS growth is lacking. Zero earnings growth corresponds to zero appreciation in the S&P 500.

  • HSBC: 4,000$225 EPS (as of Oct. 4) “…we think valuation headwinds will continue well into 2023, and most of the downside in the coming months will come from slowing profitability.”

  • Credit Suisse: 4,050$230 EPS (as of Oct. 3) “2023: A Year of Weak, Non-Recession Growth and Falling Inflation.”

  • RBC: 4,100$199 EPS (as of Nov. 30) “We think the road to 4,100 could be bumpy in 2023, with October lows likely to be retested amid declining earnings forecasts, Fed policy closer.” Transition (stocks fall ahead of final cutbacks) and investors combine challenging economic start.

  • JPMorgan: 4,200$205 (as of Dec. 1) “…we expect market volatility to be higher (VIX average ~25) with another round of equity declines, especially after what we call the end of the year and the S&P 500 much closer to 20x. In fact, in 1H23 Inside, we expect the S&P 500 to retest this year’s lows as the Fed transitions to weaker fundamentals. This selloff, combined with inflation, rising unemployment and the recession, should be enough for the Fed to start a bullish signal, followed by an asset recovery and push the S&P 500 to 4,200 by 2023.

  • Jeffers: 4,200 (From November 11) In 2023, we expect bond markets to be looking for the Fed’s terminal pricing, while equity markets are in ‘no man’s land’ with earnings still shrinking as growth and margins disappoint.

  • BMO: 4,300$220 EPS (as of Nov. 30). We believe it will be difficult to finish 2023 higher than current and expected levels.

  • Wells Fargo: 4,300 to 4,500 (As of August 30) “Our singular and consistent message from the beginning of 2022 is to play defense in portfolios, which means patience and quality of daily words. Holding on to those words indicates that long-term investors, in particular, can use patience to turn time into profit. As we wait for an eventual economic recovery, the long-term investor can use the funds available to add to his portfolio in a more disciplined manner.

  • Deutsche Bank: 4,500, $195 EPS (as of November 28) “Equity markets are expected to rise in the near term, as the US recession slows, and then recover fairly quickly. We see the S&P 500 at 4500 in the first half, down more than 25% in Q3, and back to 4500 by the end of 2023.”

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This year, the range of predictions is very wide, and therefore different surveys are giving very different results. Bloomberg surveyed 17 strategists with an average of 4,009 forecasts. A Reuters poll of 41 strategists had an average forecast of 4,200. (CNBC published the survey here, but it has not yet been updated with 2023 targets.)

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🙋🏻‍♂️ I will say two things about one year price targets.

First, don’t stress over these one-year goals if you don’t have to. Here is what I wrote last December:

⚠️ It’s unbelievable. Difficult to predict With whatever accuracy the stock market will be in a year. In addition to the countless variables to consider, there are also completely unpredictable developments along the way. Strategists often revise their targets as new information becomes available. In fact, some of the numbers you see above represent previous revisions. Forecasts. For most, it’s probably not advisable to revamp your entire investment strategy based on a one-year stock market forecast. However, pursuing these goals can be fun. It helps you to know the bullish or bearish level of different Wall Street company.

Second, most equity strategists follow a TKer that produces incredibly solid, high-quality research that demonstrates a deep understanding of what drives the markets. The most important things these experts have to offer have nothing to do with one-year goals. (And in my years with these many people, at least some of them don’t bother with the practice of publishing one-year goals. They do it because it’s popular with clients.) Don’t get rid of all their work. Just because their one-year goal is out of whack. And don’t be surprised to see me express my views in future newsletters.

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Good luck in 2023!

This post was originally published by TKer.co

Sam Roe is the founder of TKer.co. Follow him on Twitter @Samro

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