Stock Market Forecast

Stock Market Predictions

Do You Believe the Fed?

Last week saw a lift in the major markets after year to date, significant losing stretch. A classic bear market rally. With the Fed issuing guidance on its raising of interest rates, there’s plenty of room for misinterpretation of their intentions.

Of course, J Powell says they’re getting out of the forecasting game, which is crazy because investors and investment advisors do need guidance on rates and outlooks. If the Fed can’t provide that, is it a competent institution?  They’re basically covering their own behinds. It’s all about image.

Investors believe the Feds comments this week are dovish, meaning rate rises would be modest ahead, as though inflation has peaked and is now fading into history. Experts believe none of that is true.

The Fed: a Joker or a Riddler?

Instead, stock market economists feel there’s a dangerous misinterpretation of the Fed’s shaky words.  They believe inflation will be an issue and will require higher rates. Powell forecasts 3.8% to 4.3% in 2023. However, he and Yellen have little credibility, and when inflation reappears, that little will sink further. Experts speaking on Bloomberg felt his comments actually point to higher rates and that inflation is here to stay.

If anything, based on what we heard today, the median Fed member’s view on the path of the Fed funds rate over the remainder of this year could conceivably be higher” analysts at NatWest Markets said in a note.

More balanced economists believe Biden and the Fed will have to crash the economy to snuff out inflation. With the government doing little to increase production capacity in the US, there’s little hope prices will come down and rising rates is all they have. The housing market certainly got hit with fast rising rates, and this rate increase will help show it further.  Oil prices are falling due to fast falling demand (down 3 million barrels a day due to economic slowdown). This all points to a recession.

In 2022, we’ve seen a lengthened devaluation, but no precipitous plummets. Could that be coming in October as oil demand peaks and action against Russia peaks? Europe is facing the worst and the call for a European recession is 100% now.

The Dow, S&P, and NASDAQ saw a nice bear market rally this past week.

Current Major Indexes (as of July 31)

  • S&P 500 : 4,118.50 ↑
  • Dow Jones 30 : 32,699.00 ↑
  • Nasdaq : 12,928.50 ↑
  • Russell 2000 : 1,873.80 ↑
  • WTI Crude Oil : $98.11 per barrel ↑
  • Gold : $1,780.50 per ounce ↓
  • US Dollar : $105.93 ↓
Screenshot courtesy of Yahoo Finance. Stock market performance last 3 months.

This is not investing advice, but in the best scenario, the 3 to 6 month forecast is negative, yet after bottoming out in the fall, we may see a rebound after the mid term elections. There are news stories to that effect, but Russia isn’t done bombing the Ukraine and the Fed’s balance sheet reductions and interest rate hikes might be just starting. That does add fuel to the stock market crash scenario.

JP Morgan Believes This is a Bright Spot

JP Morgan believed there would be a buying spree of equities driven by quarterly balancing. Looks like the buying spree is happening.

Yet investors and day traders alike who want to benefit from the stock price volatility have to be aware of conspiring “market saboteurs” who can quickly counteract a positive trend. They could be Fed governors, manipulative politicians, or terrorists launching rockets. There is no stability in 2022 markets, only volatility as investors quake with every news story. With an expected Fed rate hike this month, many are warning we haven’t seen the market bottom as yet.

August September Outlook? Rocky Road Ahead in September/October

In fact as I suggested, we did see a warm, sunny period this month, however the 3 month to 6 month forecast period is a little gloomy.  This prediction is despite some expert’s view that we’re just about over the worst.

3 Month, 6 Month and 5 Year Forecasts

See today’s stock market data below. And enjoy the expert’s forecast, 3 month forecast, 6 month forecast, and 5 year  to help you visualize the investment road ahead. If you invest for the 10 year period, and pick solid long term companies, it might take the worry out of your investment porfolio.

Recession Indicators Glowing Stronger

Rising energy costs, discouraged US companies, huge debt, and rising rates has everyone bummed out.  After the next 3 month period, we could be headed down strongly into a deep dark period 6 months from now.

Ethan Harris, head of global economics research at Bank of America Corp. “We’re either going to have a weak economy or a recession.” — TBS News Report

Jamie Dimon of JP Morgan said there’s a 66% likelihood the U.S. is headed into a mild recession or something even worse.

We put the odds that the economy will suffer a downturn beginning in the next 12 months at one in three with uncomfortable near-even odds of a recession in the next 24 months,” said Moody’s Analytics chief economist Mark Zandi said in a May 16 note — Washington Post.

These economists aren’t the only one’s as more predictions of late are increasingly negative.

Consumer sentiment index last 5 years. Screenshot courtesy of Ycharts.Investors may want shy away from next weeks stocks, next months and even the 3 month outlook and find stocks to hedge against a recession.  Make your new stock investing plan based on the 5 year forecast or even 10 year forecast.

Bear Market Territory

Lael Brainard, usually a more dovish policymaker, said she expected “a combination of rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a  more neutral position later this year. Further tightening would follow as needed” — from CNBC report.

The market selloff across the world is making the US greenback a popular choice. The greenback is bolstered by expected interest rate rises, as inflation may not be cooling off for some time.  Is the US dollar still a safe haven?

Sector Watch

Trading Views sector watch shows some interesting possibilities in producer manufacturing. The 3 month performance was outstanding and with global supplies cut, US companies will become businesses go to source in 2022. US manufacturing GDP is well down from last year, so what will a full economic reopening along with lower imports do for US producers?

Despite being neglected, the US energy sector will continue to perform very well.  The US dollar is up too, generating higher revenues for US exports.

Screenshot courtesy of Yahoo Finance. Top Market Sectors

Expert Forecasters Projected Excellent Growth

Brad McMillan CIO of the Commonwealth Financial Network is projecting 7.5% nominal economic growth and 3.5% real economic growth in 2022.  That projection is bullish and the summer season will help, but full year will likely not make it.  However, the inflation problem is not transitory and it looks like the only tool Biden has to deal with it now, is to raise rates. That creates a likely US recession including a harder landing than many expect.

The tech sell off always happens when interest rates rise and inflation continues. Tech stocks were dumped on as the talk is about inflation and rising rates rises.  See more on the best stocks to buy.

See more on the big winners and losers below and more about which stocks to buy.  Do the stock market crash prognosticators have a leg to stand on? Well, the 2022 mid term elections will be a battle.

Forecasts for the S&P

Bank of America forecasts the S&P will be flat next year rising only to 4600, however it’s already hit a record of 4799 during a dark moment. On the other hand Goldman Sachs’ predicts the S&P 500 will rise to 5,100 (+12%) by the end of 2022. BMO feels it could reach 5300. That’s well down from 21% growth during 2021.  JPMorgan is projecting a 10% S&P gain to 5,050. Morgan Stanley is predicting an S&P drop from 4500 now to 4400 in 12 months. All these forecasts are likely to be downgraded further.

Forecasts are made more difficult due to high market volatility. The volatility is near term and due to rate hikes, oil supply, Fed intentions, and inflation rate announcements. When bad news hits, it tends to take everyone out now. More investors are very skittish, and realizing the 30% hit they’ve taken this year could increase to 50% loss. Will they start buying gold?

Market Forecast for This Week

Last week brought both anxiety and discouragement to the markets.   With Covid 19 fading, people are feeling good and they are spending their savings. Yet markets are forward looking with many eyeballing the 3 to 6 month forecast. The 5 year and 10 year forecasts are better because we’ll be out of this period and more firmly into the deglobalization era with abundant energy supplies.

The housing market forecast is dampening with the mortgage rate rises.  with strong price growth forecasts, and more construction is expected. Some advisors are bullish on housing construction stocks.

Best Performing Stocks

Energy stocks dominate the top Alpha performers of late, according to Barchart’s data.  See more on the best stocks to buy including oil and energy stocks.

Top Stocks last month. Screenshot courtesy of Yahoo Finance.

Top Losing Stocks

Health, biotech, and other speculative stocks were hit hard again, and it’s been a repetitive fact for the last year. Investors in these stocks might be dreamers who may end up losing their savings.  Time to abandon ESG and other high cost dreamer stocks and into practical winners — oil stocks.  The numbers provided by barchart don’t lie.

Worst performing Stocks. Screenshot courtesy of Yahoo Finance

Most investors want high growth stocks but it seems they’re taking a beating right now. This is where the buy the dip opportunity comes in. Smart investors are experts at buying the dip and many are waiting for May and June for profits to get rolling in again.  On a positive note, the travel market is heating up. Some travel stocks are worth a look, however they pale in comparison to energy stocks.

Investors are in volatile period and more are looking the best stock market forecast for insights and guidance.   See the 3 month, 6 month, 5 year and 10 year outlooks for ideas.

Top Recommended Stocks This Week

Looking for the latest stock prices and best stocks to buy for next week? Energy stocks will be the darlings again, and despite political tactics to manipulate prices.  Limited oil supplies and refinery limitations will be driving prices back to new records.  An active hurricane season hasn’t been priced in. Electricity utilities are seeing huge price hikes too.

Projections of oil prices are up to $140 a barrel now because of supply shortages (exploration and drilling were discouraged/prevented in the US) so that political choice is coming home to roost this year. Look at Highpeak Energy Inc, Southwestern Energy, Athabasca Oil Corp, Exxon, Marathon, and any of the best Canadian oil stocks.

Forecasts 3 Months to 10 Years

If the US government and GOP stay calm, we’ll only suffer a slow 3 month period this spring and then back to moderate races for the next 6 months, next 5 years and next 10 years. Remember, if the Republicans win the November elections, they will likely lower taxes which will stimulate the economy and business sentiment. This could prevent a stock market crash and a housing market crash in 2023.

The forecast for Monday opening and next week is to the downside.  Futures were down today. Earnings reports are still coming in stronger than predicted, for most stocks anyway.

Stock Market Crash Possibilities

Combine the unsettled activity this week with lower consumer confidence, debt ceiling issues, war, persistent inflation, high energy prices, out of reach housing prices, fears of rising interest rates, reduced Fed spending, and a prolonged pandemic slowdown, and you can understand why markets might sag. The wind is definitely out of the sales and consumer intent is not strong.

However, predictions still say 2022 will be a good year. The pandemic ruined the 2019 party, but it will disappear globally late.  There still is time buy this dip and find the best stocks to buy.  Check out the Dow Jones, S&P, and NASDAQ posts for opportunities, and discover more about Bitcoin, Tesla,  Apple, Oil stocks, and the 2022 best picks page for more great stocks to buy. Meta is a washout and may never recover.

Although markets sprung back from the recent dip, there is plenty more volatility coming in the next 6 months. October is often a bad month, but again, it creates buying opportunities. So, for smart investors, it’s more like a feast!

What are the Biggest Threats to the Stock Market?

Stock market investors and those invested in  real estate stocks are trying to visualize the key threats that might cause a lot of pain. If you read the stock market crash report, you’ll get a good look at all the crash signals and factors that may lead to big investment losses.  Pay attention to those stocks that might be good hedges against a correction or downturn and which securities you should not buy.

Will There Be a Stock Market Crash?

Within a realistic outlook, a stock market crash seems unlikely, however you should still be up on all the factors as they change and combine to present threats to the markets.  Choosing stocks that will survive a crash is good and you should know more how to hedge a crash as smart management of your IRA, 401k or RRSP.

Predictions: As for today and tomorrow, next 3 months, next 6 months, or next year, the outlook is positive but maybe not to the satisfaction of some investors. With such bubbly activity, the worry is a high speed wobble (volatility) and a crash of the stock markets, and perhaps even crashing the housing market. This turbulence will reach the housing market and encourage homeowners to sell their house fast.

Retail sales rose only .9% in April, so it looks like the great overheating is overdone. GDP for the first quarter was down 1.4%.  However, according to BEA, personal income increased$268.0 billion in the first quarter and disposable personal income increased $216.6 billion, or 4.8 percent, compared with .4% from the previous last quarter of 2021. But will consumers save the stock market and economy in 2021?

I said there was a lot of phoniness in this market with Tesla, Bitcoin, Dogecoin, AMC and other stocks flying high. Now in May, it looks like this was very accurate.

Which are the best stocks to buy today/tomorrow or in the next 6 to 9 months?  Which will be hottest stocks during the coming fall season?  There are other stocks not reflected in today’s hot Wtd Alphas but will perform well in 2022.

Looking for good stocks to buy? See more on 5G stocks , FAANGs, top stocks for your 401k investment. See more about Google stock price Apple Stock price Facebook stock price , and Amazon stock price.

Inflation a Continuous Threat?

Governing politicians and other “experts” told us inflation is transitory. However the charts tell us it is more persistent. They got that very wrong and therefore are unreliable as credible forecasters.

As I said during the pandemic, trillions in government spending and low interest rates continuing, along with supply chain bottlenecks, is a fertile ground for record breaking inflation.  And here we are now with 8.6% inflation. Yet with EU sanctions on Russian oil, we might see inflation push upward toward 10% in July.  

You should be hedging your investments with good stock selection. Charlie Munger says diversification is for idiots.  Pick the best horses to win.  Everyone seems to believe inflation is going to be an issue for the economy and for listed companies. Here’s a few stocks CNBC/Insider Monkey believes will weather the inflation storm:

  1. Newmont Corporation (NYSE: NEM)
  2. AT&T Inc. (NYSE: T)
  3. Medical Properties Trust, Inc. (NYSE: MPW)
  4. Dollar General Corporation (NYSE: DG)
  5. Activision Blizzard, Inc. (NASDAQ: ATVI)
  6. Etsy, Inc. (NASDAQ: ETSY)
  7. Philip Morris International Inc. (NYSE: PM)
  8. Oracle Corporation (NYSE: ORCL)
  9. Colgate-Palmolive Company (NYSE: CL)
  10. Adobe Inc. (NASDAQ: ADBE)
  11. The Procter & Gamble Company (NYSE: PG)
  12. Aspen Aerogels, Inc. (NYSE: ASPN)
  13. Zoetis Inc. (NYSE: ZTS)

Factors affecting the Stock Market

  • economy had a meager showing in the last 6 months, GDP shrunk in last quarter
  • inflation rises rapidly and will persist despite Fed rate increases
  • rising rates are discouraging lending and investment
  • bond and treasury rates will may money out of equities (5 year outlook)
  • US dollar rising fast which hurts US exports
  • summer season pushes demand for travel, gasoline, and food even higher
  • rent prices rising putting extreme pressure on American consumers
  • markets sagging with increased volatility which scares off investors
  • price earnings ratios suggest stocks are grossly overpriced
  • Fed said they wouldn’t raise rates until 2023 but that’s changed
  • $5 trillion sitting in money markets and where will it go (oil and energy stocks?)
  • Oil prices rising which means higher gasoline prices and transportation and manufacturing costs
  • S&P, and Dow Jones, NASDAQ and Russell 2000 still have room to grow
  • jobs reports okay but not great

5 Year Long Term Forecast is Optimistic

Just a little discussions on the 5 year stock market forecast (and 5 year housing market forecast ) look really good too because the American consumer is well employed as business is rebuilt from the ground up. The ten year outlook is more clouded, but millennials will need products for some time.  Then intent to buy homes remains strong and construction rates will grow fast through the coming spring as labor and supply shortages ease.

The latest US jobs report is good. The 2022 to 2027 5 year projections are not priced into the market, but instead are focused on current earnings/sales and wishful thinking over the 5 year term.

Bank and Broker Forecasts

Goldman Sachs is forecasting recessionary numbers with a new GDP growth projection of a weak 1.75% with a 35% chance of a recession.

Final thought?  2022 looks really good, but if global markets crash due to lingering Covid infections, a stock market crash and housing market crash would be simultaneous. Optimism is a great catalyst, but you can see how periodic reality reaches the investor masses once in a while. Let’s cross our fingers for smooth sailing ahead.

See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento.  See stats on other cities, including Denver, Dallas, New York, Boston, Atlanta and in the Florida housing market in Miami and Tampa.  Visit Linkedin if you’re seeking advanced SEO and real estate marketing services for Fintech or Real estate firms.

Rising mortgage rates, inflation, reduced housing supply and high home prices threaten the markets, it appears 2002’s real estate scene will stay strong. Realtors may want to build their presence this year as house prices decline in 2023. Lower prices will bring plenty of homes onto the market and boost your opportunities.

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