Top Wall Street Strategists Give Their S&P 500 Forecasts For 2023

Top Wall Street strategists give their S&P 500 forecasts for 2023. They predict that Bank of America (BofA), Morgan Stanley (MS), and Credit Suisse (CS) will be among the leaders, while GE, Apple, Facebook, and Netflix will continue to perform well. In addition, they predict that the S&P 500 will be up 10% over the next few years.

Bank of America

Bank of America is out with its S&P 500 forecasts for 2023. It’s a mixed bag, but the good news is that the stock market should end the year with a record high. The bad news is that the market could slide into a recession.

The company is forecasting S&P earnings per share to be $200 for the coming year. That’s 15% below other Wall Street estimates.

Despite that, the BofA team is optimistic that earnings will grow over the next several years. In fact, it’s predicting that its investment banking division could pick up after trading revenue normalizes.

As far as the overall economy, it expects it to expand at an annual rate of 1.6 percent in 2023. This is lower than previous predictions, but the economy should be healthy enough to support a continued growth cycle.

Deutsche Bank

The world economic outlook from Deutsche Bank on Monday is a bearish one. The firm expects a recession to start next year. This is a big deal because it is the first time major Wall Street analysts have predicted a recession.

The forecast says that global equities will drop by mid-2023. The S&P 500 could end the year at 4,500, and a recession would take hold by the third quarter. Ultimately, the S&P 500 would have to fall by over ten percent to reach that level.

The bearish economic outlook is based on the rise of inflation and tightening monetary policy. Inflation is the loss of purchasing power over time. Historically, a decline in inflation has been a red flag for recessions.

Some of the key risks include earnings cuts, valuation compression and a U.S. economy that is undergoing a mild recession.

Morgan Stanley

The S&P 500 is expected to end the year at 3,900. This is slightly lower than Wall Street’s consensus target of 4,200.

During the first half of the year, the S&P 500 was up more than 20% from the record close of Jan. 3. It has now fallen in eight sessions.

Despite the stock market’s Q4 rally, the outlook for 2023 remains clouded. Many analysts are predicting a slowdown in growth and inflation. A recession is still possible in the U.S. EM economies could outperform in the long term. However, Europe’s natural gas crisis is likely to flare up in the winter.

Inflation in the United States has risen to a 40-year high. Historically, high quality bonds have performed well when the Fed stops raising interest rates.

Credit Suisse

Credit Suisse has revised its S&P 500 forecasts for 2023. It expects weak non-recessionary growth in 2023, which would result in a drop in the S&P 500 to 3,200 in the fourth quarter.

Credit Suisse also expects a fall in inflationary pressure, which may allow the Federal Reserve to ease hawkish monetary policies. However, the company said that tightening monetary conditions would hurt corporate bottom lines.

In addition, the bank expects a decline in US economic growth, which could lead to a recession. The firm also expects a growth recession in China, as well as a recession in the UK and the Eurozone.

While the S&P 500 will not experience a major long-term crash in the next few years, it is unlikely to rally. Instead, it is likely to suffer from short-term volatility.

BofA

Earlier this week, Bank of America Global Research released a new outlook on the S&P 500. While some analysts see no earnings growth in 2023, BofA’s scenario calls for a flat year for the benchmark index.

According to the outlook, the economy should grow 1.6% in 2023, but the U.S. may enter a recession before the end of the decade. The European region is expected to see a mild recession in the first half of the year. However, the region should experience a more substantial recovery in the second half of the year.

For investors looking for short-term investment opportunities, the S&P 500 will likely drop during the first half of 2023. In the second half, the markets will have more tolerance for risk. This will allow asset prices to rebound more strongly.