The S&P 500 fell about 1000 points from around 4800 in January 2022 to close at around 3800 in December, a nearly 20% drop. Still, true-to-label bear market rallies kept investors optimistic in March, June, and October of 2022. Will S&P 500 continue to fall or bulls will take the index higher? Only time will tell but meanwhile, analysts and investors are busy predicting and giving calculative targets.
The S&P 500 index, the leading barometer of the US stock market, is one of the most tracked indexes by analysts and investors worldwide. Several analysts have predicted and estimated the S&P 500’s end-of-year forecast and target. The possibility of another year ending with losses always exists. However, many analysts are of the view that markets may initially fall more and may recoup losses during the second half to close 2023 at around the same levels as January 2023.
Here’s an interesting piece of data from Bloomberg according to which, after the 2022 US market fall, there is just a small likelihood that US equities would collapse again in 2023 because successive down years are uncommon for US stocks. However, history indicates that if they do, investors will have to brace themselves for another extremely miserable 12 months.
Also Read: Fed minutes reveal no rate cuts in 2023, economy headed for recession
Since 1928, the S&P 500 Index has only fallen for two years in a row four times: during the Great Depression, World War II, the 1970s oil crisis, and the start of this century’s dot-com bubble. However, when markets fall for two years consecutively, the second-year declines have always been greater than first-year declines, with an average decline of 24%. That would be worse than the year’s so far 20% decline.
According to the average forecast of the 22 strategists surveyed by Bloomberg, the S&P 500 is expected to end next year at 4,078 points, or nearly 7% higher than present levels, The most optimistic prediction calls for a 24% growth, while the pessimistic one projects a decline of 11%.
Also Read: US stock market performance 2022, a review of top Wall Street stocks and indices
The real impact of Fed rate hikes is yet to reflect in the economy particularly corporate earnings, consumer demand, and the job sector. Unless a black swan incident doesn’t derail the bullish sentiments this year, the US economy’s resilience, a more gradual rise in interest rates, and China’s opening up after strict Covid lockdowns are the silver linings for the stock market boom in 2023.