Investors predict S&P growth in 2023
2022.11.29 07:58
Investors predict S&P growth in 2023
Budrigannews.com – According to a poll of strategists conducted by Reuters on Tuesday, U.S. stocks will end the year up around 6% after a rough start to 2023 as higher interest rates take their toll on the U.S. economy.
According to the strategists, two of the biggest risks to the market are that corporate earnings growth in the United States stagnates and that the U.S. Federal Reserve plunges the economy into recession as it raises rates to combat inflation.
The median prediction of 41 strategists polled by Reuters over the past two weeks is that the benchmark will end the year at 4,200.That is 6.0% more than the close of 3,963.94 on Monday.
That middle figure for year-end 2023 is down from an objective of 4,700 in a Reuters survey led in late August.
“It’s a story of two parts.At BofA Securities’ outlook conference on Monday, head of U.S. equity and quantitative strategy Savita Subramanian stated, “We see the market having a rougher start to the year and closing the year in recovery mode.”
The firm sees the S&P 500 consummation one year from now at 4,000, and it anticipates a gentle downturn in the main portion of 2023 and a facilitating of Taken care of strategy toward the following year’s end.
Stocks on Wall Street have gained a lot of ground in recent weeks, possibly as a result of hopes that the Federal Reserve will ease up on its rate hikes. In November, the Federal Reserve raised interest rates by 75 basis points for the fourth time in a row.
The direction of inflation in the coming months, among other things, will determine rate policy.In October, consumer prices in the United States declined less than anticipated, bringing the annual increase below 8% for the first time in eight months.
However, the S&P 500 has entered its second bear market since the global sell-off triggered by the coronavirus pandemic in 2020, when it was down nearly 17% for the year.
Although professional strategists’ forecasts provide valuable insight into sentiment on Wall Street, their forecasts have generally had poor track records for predicting stock market returns, particularly at the beginning of a new year when so much remains unknown.
The majority of the strategists surveyed predicted that the earnings picture would worsen rather than improve over the next six months, with some predicting that the S&P 500 would not see any earnings growth in 2023.
According to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota, “At present, company guidance for 2023 is largely elusive given economic uncertainty, ongoing inflationary pressures, and lack of visibility into consumer and business spending in 2023.”Sandven projects that the S&P 500 will be 4,275 at the end of 2023.
Based on IBES data from Refinitiv, analysts anticipate a decline in earnings for the fourth quarter in the United States for the first time in two years. For 2023, estimates have also been falling.
Based on the data, they anticipate a 4.9% increase in full-year profit growth for 2023, as opposed to an estimated 5.8% increase for 2022.
Due to their impact on stock valuations, earnings estimates are closely watched.According to data provided by Refinitiv, the S&P 500’s forward 12-month price-to-earnings ratio is currently approximately 18 as compared to 22 at the end of December 2021 and a long-term average of approximately 16.
“Whether earnings will stabilize or not, there is still uncertainty.However, rates may begin to fall in the middle of the year, according to King Lip, chief strategist at BakerAvenue Wealth Management in San Francisco. He anticipates that the S&P 500 will finish the year at 4,400.
BofA’s Subramanian believes that energy has more room to run among sectors because it has risen 61 percent year-to-date and is the best-performing S&P 500 sector. She underestimates technology and other industries. Lip suggests industrials but would steer clear of energy.
The poll indicates that they will finish the year with 36,500, an increase of 7.8% from Monday’s close.
