3 Biggest Market Predictions: March 2022
1. The market will lose support from earnings
Earnings season is just about over, which is bad news for the stock market. So far, 95% of the S&P 500 companies have reported their results for the fourth quarter. More than three-quarters of them exceeded Wall Street's expectations for sales and profits. The S&P 500's average 30% earnings growth rate has been nearly 8% higher than analyst estimates.
Importantly, consumer discretionary and technology stocks were particularly strong. These sectors tend to be volatile during turbulent markets, so these positive results probably created a lot of stability.
2. Updates from the Fed will be crucial
The Federal Reserve Open Market Committee (FOMC) is scheduled to meet again on March 15 and 16, and investors will be tuning into the press conference for information. Rate hikes are a hot topic as the monetary authorities struggle to contain inflation. Any indication that interest rates will rise more quickly than expected is likely to push the market downward. If the Fed's commentary suggests that rate hikes will be less extreme than anticipated, stock prices might jump upwards.
Inflation has tracked higher than most forecasts since the last FOMC meeting was held in January. That inflation data has been digested by investors, but everyone is still waiting on Fed commentary to confirm expectations. Consumer prices continue to put pressure on the Fed, so it's unlikely that the rate hike timeline will be extended.
3. There will be attractive buying opportunities in March
Valuations in the market hit unsustainable levels during the pandemic rally. Low interest rates and high-risk appetites drove stock prices near all-time highs relative to earnings, sales, dividends, book value, and cash flows. Rising interest rates and more conservative attitudes toward risk are reversing that.
The S&P 500 is nearly 10% below its all-time high, and growth stocks are bearing the brunt of the pain. The best stocks to weather these predictions are Netflix, Meta Platforms, and Tesla.
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March predictions were realised $Apple(AAPL)$ Apple was my Best Buy
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