Will the Market Crash in 2023? Analysts's Forecast are...
Most Wall Street banks expect the US economy to fall into recession sometime in 2023. They see more room for downward revisions to corporate earnings expectations in 2023. These downgrades as implying greater volatility for the stock market in early 2023.
Why Banks Think There Will be a Market Crash?
1. Morgan Stanley strategist Michael Wilson said the looming earnings recession "could itself be similar to what happened in 2008/2009.
This could trigger a new stock market low that is "much worse than most investors expect.
"Our advice is not to assume that the market has priced in such an outcome until it actually happens. While inflation has now begun to fall from historic highs, recent signs of weakness in the U.S. economy are worrisome."
But Michael noted that there are no signs of systemic financial risk or distress in the housing market are foreseen, and the stock market is not expected to fall 50% as it did in 2008.
data from bloomberg
Morgan Stanley team forecasts that:
The $S&P 500(.SPX)$ could fall to 3,000 next year, which means this index will fall another 22% from last Friday's close.
2. Societe Generale predicted that the US to fall into recession in the first quarter of 2024.
We are bearish on the 2023 move, but not as bearish as we were in 2022. With the Fed nearing the end of its current rate hike cycle, returns should be much better in 2023.
Under our 'hard soft-landing' scenario assumptions, the index's earnings per share growth rate will pick up to 0% in 2023.
The S&P 500 is expected to reach 3,800 points by the end of 2023.
We expect corporate earnings growth to be negative in the first half of 2023; the Fed's policy stance to shift in June 2023; and
3. UBS expects to expect the US to fall into recession in the second quarter - fourth quarter of 2023.
The S&P 500 will reach 3,900 by the end of 2023, and the index is expected to earn $198 per share in 2023.
The situation in 2023 is essentially a 'race' between a moderating inflation and financial environment and an impending shock to economic growth + corporate earnings.
History suggests that economic growth and corporate earnings will continue to deteriorate until the financial environment is substantially eased and the market enters a trough."
4. CFRA chief investment strategist Sam Stovall said we're heading into a recession, but next year will be split in half.
Stocks are likely to improve in the second half. The S&P 500 is expected to return to this year's October lows in the first half of 2023.
However, the recent cooling of inflation provides optimistic signals.
Since 1950, the S&P 500 has averaged a 13% total return in the 12 months following 13 major inflationary highs, said Jim Paulsen, chief investment strategist at Leuthold Group.
In the 10 cases where the index rose after a big spike in inflation, the S&P 500 also had an average total return of 22% in the following year, the firm's data show.
Do you think market will crash or not in 2023?
Is the investing logic in 2023 similar to that of 2022?
What's your target price for SPX. in 2023?
Share your thoughts in the comment section and win tiger coins~
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
If a recession does materialize in the U.S. in 2023, you can be all but certain that corporate earnings are likely to fall. Wall Street analysts have yet to fully price in the impact of aggressive Fed rate hikes. @Tiger_chat
Good luck all the investors!
🌟🌟🌟Will the market crash in 2023? I believe it won't because of the following reasons:
1. Inflation is coming down from its all time high and decelerate in 2023 due to rising interest rates and Hawkish Feds.
2. Volatility is coming down. A good indicator is the volatility index VIX. VIX is coming down from a high of 38 to 20 currently.
3. S&P500 earnings in 2023 are projected to move sideways rather than down.
4. Consumer spending is still up not falling. A stock market crash normally comes with falling consumer spending.
5. Labour markets are still tight. In a stock market crash, high unemployment is prevalent.
6. China's change of Covid policies will result in better economic returns in 2023.
2022 has been a year where there was everything was down and a stock market crash could happen but it didn't. 2023 will be a much better year and the markets will resume its upward trend by mid 2023. I predict that SPX will rise to 4500 in 2023.
@Tiger_chat
However, the decline may not be long term as the impact of high interest rate is already being reflected in the economy as we see more retrenchment, hire freeze, new/resale housing market slowdown (though it may get magnified in 1st half of 2023). One may see Fed reversing course in second half of 2023 as inflation continues to cool and Fed attempting a “not so hard landing”. When that happens, investing strategy may change as growth may come into emphasis and tech will re-emerge as the new darling.
My guess is that SPX may end 2023 around 4200.
Let me know your thoughts on 2023 outlook. [Grin] may all tiger friends ride out this tough times! [Victory]
Likewise, the forward P/E ratio of the S&P 500 is currently 17.3. There hasn't been a sizable correction, crash, or bear market since the beginning of 1999 that found its bottom at a forward P/E ratio of higher than 14. In short, valuation indicators would imply that equities are still pricey and have room to fall.
Those same three things will reverse course in 2023. And as they do, stocks will reverse course, too, and go from crashing to soaring.
Inflation will cool, leading to smaller rate hikes and maybe even rate cuts, which will juice the economy. I expect he S&P 500 index to be at 4200 levels at the end of 2023