Wall Street’s 2023 outlook for stocks

This post was originally published on TKer.co

It’s that time of year when Wall Street’s top executives tell investors where they see the stock market in the coming year.

Generally, the average model for the sector predicts the S&P 500 to rise by about 10%, which is consistent with historical trends.

This time, things are good caution is uncommon and most likely the S&P will end 2023 lower than it is now.

Hundreds of pages of research and analysis come with these models. The general theme: Most Wall Street firms expect the U.S. economy to go flat sometime in 2023. Many believe that earnings forecasts for 2023 are likely to be cut, and some are believe that those changes below mean more changes for buyers in the beginning. of 2023. At the same time, many also expect an unexpected drop in inflation, which will give the Federal Reserve the clearance to relax on his fiscal policy. At least some policymakers think that if economic conditions worsen, the Fed may return to cutting interest rates.

Taken together, forecasters expect a sluggish first half to be followed by an easy second half, which could seeing stocks climb higher.

Below is a list of 16 of these 2023 forecasts for the S&P 500, including information from the guidance team. Expectations range from 3,675 to 4,500. The S&P closed on Friday at 4,071, which means gains between -9.7% and +10.5%.

• Barclays: 3,675, $210 EPS (through Nov. 21, 2022) “We see some upside in our forecast due to high inflation, strong consumer balance and a stable labor market. However, the current expansions are baked into a volatile situation in the climate and result in a weak situation, which we continue to believe is likely to happen.

• Societe Generale: 3,800 (as of Nov. 30) “Bearing but not as bearish as in 2022 should be the background of the return in 2023 as the Fed hike is near for this cycle. Our ‘soft’ scenario sees EPS growth at 0% in 2023. We expect the index to trade in a broad range as we see earnings growth in 1H23. , the Fed pivots in June 2023, China reopens in 3Q23 and the US recession in 1Q24.”

• Capital: 3,800 (as of October 28) “We hope that global economic growth will be disappointing and that the world will fall into recession, causing more pain for the equality of the world and commercial media. But we do not expect a long-term recession from here: until the middle of 2023 or worse may be behind us and the risk assets can, in our look, start together again on a permanent basis.

• Morgan Stanley: 3,900$195 EPS (as of Nov. 14) “This puts us 16% below consensus on ’23 EPS at our baseline and below 11% from annual growth. After the remainder of this current forecast period, we see the S&P 500 reducing ’23 earnings at some point in Q123 by ~3,000- 3,300 price. We think this happens before the next period in EPS, which is normal for earnings.

• UBS: 3,900$198 EPS (as of Nov. 8) “With UBS analysts seeing a US recession for Q2-Q4 2023, the setup for 2023 is a race between deflation and financial conditions versus income growth. History has shown that growth and income continue to fall in markets before financial conditions ease.”

• City: 3,900$215 EPS (as of Nov. 18) ” Our view shows that most people tend to expand to come out of the recession as EPS continues to fall in the denominator as the price starts markets in recovery on the other hand. Part of this large increase, however, has a price connection. The push for monetary policy is four lower rates raise the multiplier as the economy moves out of the depths of recession.

• BofA: 4,000, $200 EPS (as of Nov. 28) “But there’s a lot of variation here. Our bull box, 4600, is based on our Buy Side Indicator which is close to the ‘Buy’ signal as it has been under the previous markets – Wall Street is falling, which is ridiculous. Our bear is from strengthening our signal to get 3000.”

• Goldman Sachs: 4,000$224 EPS (as of Nov. 21). Growth. Earnings growth will match the lack of appreciation in the S&P 500.

• HSBC: 4,000$225 EPS (as of October 4) “…we think inflation will continue in 2023, and most of the downside in the coming months will come from slowing earnings. “

• Credit Suisse: 4,050$230 EPS (as of October 3) “2023: A Year of Weakness, Increased Growth and Declining Value”

• RBC: 4,100$199 EPS (as of Nov. 30) “We think the path to 4,100 looks like a tough one in 2023, with a re-examination of the October low earlier in the year as it declines income statement, Fed policy approach. a change (stocks often fall before the final deadline), and investors are bracing for the start of a challenging economy.

• JPMorgan: 4,200, $205 (as of December 1) “…we expect market volatility to remain elevated (VIX average ~25) with another round of equity reductions , especially after the end of the year where we called with the S&P 500 up close to 20x. More precisely, in 1H23 we expect the S&P 500 to re-examine this year’s lows as the Fed tightens on weak fundamentals. This sell-off combined with deflation, rising unemployment, and declining business sentiment should be enough for the Fed to begin signaling a pivot, ultimately fueling the asset recovery, and pushing the S&P 500 to 4,200 by the end of the year 2023.

• Jefferies: 4,200 (as of Nov. 11) “In 2023, we expect that debt markets will be searching for Fed rate hikes while equity markets will be in ‘no man’s land’ and are Revenues continue to fall due to growth and disappointing spending.

• BMO: 4,300$220 EPS (as of Nov. 30). sales will end 2023 higher than current levels and expected due to the ongoing battle between Fed messages and market expectations.

• Wells Fargo: 4,300 to 4,500 (as of August 30) ” Our single and consistent message since the beginning of 2022 is to do security in the files, which means to do patience and good word security in Every day. Sticking to those words shows that long-term investors, in particular, can use patience to turn time into a profit. As we As the economy recovers, the long-term investor can use the available funds to add incrementally and strategically to the portfolio.”

• Deutsche Bank: 4,500, $195 EPS (as of Nov. 28). We see the S&P 500 at 4500 in the first half, down 25% in Q3, and back to 4500 by the end of the year 2023.

Keep talking

A lot of information is very broad this year, and different studies produce different results. Bloomberg analyzed 17 guides with an estimated budget of 4,009. A Reuters poll of 41 pollsters showed a median of 4,200. (CNBC published its analysis here, but did not update the 2023 target.)

🙋🏻‍♂️ I’ll say two things about the one-year price.

First, don’t worry about these one-year goals if you don’t need to. Here’s what I wrote last December:

Second, many similar TKer models are followed to produce the most robust and high-quality studies that reflect a deep understanding of what drives them. market. The most important things that these experts have to offer have little to do with one-year expectations. (And in my years of dealing with many of these people, at least some of them don’t care about implementing the one-year publishing plan. They do it because they’re popular with customers.) Don’t dismiss it. all their work. because their goal of one year has not been met. And don’t be surprised to see them clarify their views in future newsletters.

Happy 2023!

This post was originally published on TKer.co

Sam Ro is the founder of TKer.co. Follow him on Twitter at @SamRo

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