Most stock market forecasts for 2023 see moderate improvement. UBS targets a year-end 2023 S&P 500 at 3900 and KKR sees it at 4150. CFRA expects a 2.9% gain, which would put the S&P over 3900. It's now around 3840. more
Investors suffered a beatdown in 2022, with all three major indexes making their biggest declines since the 2008 financial crisis. The Dow Jones Industrial Average fared the best, down about 8.6% thanks to its relative underexposure to badly beaten technology stocks. The tech-heavy Nasdaq composite endured an ugly fall of more than 30%, while the S&P 500 sank 19% as of the close of trading Thursday. more
The year was even more challenging for growth stock investors. The Innovator IBD 50 ETF slumped around 50%, while the IBD Sector Leaders plummeted a devastating 60%. In 2022, the "big is beautiful" theme was underlined by the IBD Big Cap 20 falling less than 7%.
A number of factors drove the heavy pullbacks. Inflation and the Russian invasion of Ukraine dealt a devastating one-two blow for equity markets. The Federal Reserve then pivoted from its stance that inflation was transitory and began aggressively raising rates in an attempt to tame prices. These efforts now appear to be bearing fruit, but only after hammering markets lower.
"Investors are not going to be sad to close the books on 2022, with as difficult a year as it's been for both equities and fixed income," said Wells Fargo Investment Institute President Darrell Cronk. "In fact, it's probably been the most difficult year from a rate of returns standpoint for both those major asset classes in 15-plus years."
With broad belt-tightening, corporate revenue is expected to decline. This both increases the chance of a recession and pressures company earnings.
| S&P 500 Consensus Estimates 2023 | ||
| Sector | Earnings | Revenue |
| All S&P 500 companies | 5.30% | 3.30% |
| Consumer discretionary | 35.80 | 6.90 |
| Industrials | 13.80 | 4.60 |
| Financials | 13.80 | 8.70 |
| Communication services | 10.10 | 4.40 |
| Utilities | 6.80 | 2.00 |
| Consumer staples | 4.20 | 3.40 |
| Information technology | 4.20 | 3.80 |
| Real estate | 2.70 | 4.70 |
| Health care | -3.40 | 2.80 |
| Materials | -8.90 | -2.60 |
| Energy | -13.10 | -7.50 |