New Stock Market Predictions

November ended well for the stock markets, with the S&P (+5%), Dow Jones (+7%) and NASDAQ (+8%) on the month.

While Investors look ahead to 2023 and signals of when a recovery might occur in earnest, they actually enjoyed a strong November.

Overall the final quarter of 2022 may be a strong one, but perhaps not good enough for investors who made some bad decisions in 2022. That included decisions to not sell when the government said they were going to tank the economy.

Yet, forecasters are a little gloomy about next year. The 2023 stock market forecast in general is leaning to recession. A lot of investors have their wealth parked in cash, and waiting for the next big catalyst to let them resume buying stocks.

S&P, Dow Jones, NASDAQ, Russell 2000 year to date performance.
S&P, Dow Jones, NASDAQ, Russell 2000 year to date performance. Screenshot courtesy of Yahoo Finance.

Forecasts for 2023

It doesn’t help that Morgan Stanley’s Mike Wilson is predicting double-digit percentage drops for stocks in early 2023. Other market prognosticators are called for recession in Q2 or Q3 of 2023.

That doesn’t mean you can’t find good stocks or other worthy investments. It will require research and getting feedback from investment advisors and stock investing web sites. Stock market forecasts are very important and almost no one has accurately predicted what’s occurred in the last two years.

Reviewing guidance and many insightful opinions is wise, and hopefully they’ll provide data and reasoning to back up their predictions, projections and outlooks.

The Fed/Biden decision to use recession to mitigate high prices is the key factor in the outlook. If they persist with this view that increasing unemployment and increasing financing costs will force lower spending. It’s nasty way to reduce prices and may result in reduced market performance in 2023.

The other route is to open all channels to production and more supply which would dampen consumer and business prices and encourage economic strength across the world.  Europe certainly needs a helping hand so high prices are going to cause great pain there.

The stock markets year to date show they’re still down 1% to 15%, but it’s been quite a rally given the rising interest rates. Lower oil prices supported by releases from the US oil reserves is a significant factor, but those reserves will run out. Everyone is talking down oil stock, yet some energy market experts believe oil will return to $120 a barrel in Q3 2023.

Yesterday’s solid job numbers was a negative for investors because it means the Fed will persist in raising interest rates. The BLS reports 263,000 new jobs and unemployment rate unchanged at 3.7%. That may be excellent news in that US economy is so strong, higher interest rates won’t work. The Fed would need to give up and go the other way.

Unwise Market Predictions

Some market predictions don’t seem to be paying heed to the fundamental economic factors which include tighter energy supply and rising fuel costs, rising interest rates, which could result in many nations going bankrupt.  The high US dollar too is creating huge inflation around the world.

Diesel fuel shortages are in the news now and we wonder if this will play havoc with supplies and transportation, thus adding fuel to the inflationary fire.

If the Fed were to pivot and ease off on further hikes, then US inflation would rage. A report by Steve Liesman on CNBC showed US consumers have about one tenth of the cash savings they had in 2021. They were on a spending spree. This shortfall will definitely have an impact on consumer spending and retail sales going forward. It was said that consumers were buoying the economy, but how much longer?

Economists were suggesting the recession will be pushed forward to the second half of 2023, and the recession would be quick and vicious — something companies might survive. That may be wrong as others suggest inflation is endemic and it will be a long, lighter recession.

Which Sectors and Stocks to Buy in 2023?

The performance of sectors and stocks in the last 3 months is a good guide to what you should invest in for the rest of the downturn. Those (defensive stocks) with good balance sheets in the best sectors in 2023 might be the safest investment.

Starting with the three best sectors, choose among the top 100 growth performers. Choose a small basket of stocks in sectors you understand and can learn about. Investing in opaque industries and mysterious companies is unwise. I’ve done that and I was lucky to not lose more.

Develop a stock portfolio you can be expert in, especially those sectors that are about to be the best as the recession takes hold. The best stocks in the Dow Jones is drawing attention (supply shortage).  This chart below courtesy of alphaprofit.com shows forecasted growth of the best sectors. I’d recommend visiting alphaprofit.com as they have their eye on the ball and can give you some great investment ideas.

Forecasted EPS Growth. Best sectors to invest in 2023. Screenshot courtesy of alphaprofit.com.

The issue of which sectors is important because it allows you to refine your investment strategy to target only the very best companies.

See the changing 3 month and 6 month reports along with the longer term 5 year and 10 year outlook. Review what may be the best stock picks.

Scary CPI Report Didn’t Scare Investors!

The most recent inflation reports haven’t phased investors much. Q4 was strong.  It sort of has been a santa claus rally. Will Janury, February and March offer up a buy the dip moment, where investors believe peak inflation is in the rear view mirror?  

Wild Swings in Forecasts from Some

6 weeks ago, one fund manager, Eric Johnson of Efficiency Market Advisors suddenly turned bullish for the 3 month outlook.  He and his stock investment advisory firm were just calling for a continued bear market. He says: inflation is falling sharply, the VIX is down, oversold indicators are up, rents are falling and home prices are falling, and the FED will stop hiking on December 14th, in an interview on CNBC.

Almost none of that is true. Yet there are still a lot of bulls sitting impatiently waiting to buy.

Johnson believes this pattern, V bottoms, has happened before and investors will jump on news the Fed is done. The S&P, Dow Jones and NASDAQ are exhibiting some volatility of late. See more on the Dow Jones forecast, S&P forecast, NASDAQ forecast, and TSX forecast. The SPY ETF, best Dow Jones stocks, and 5 Year Stock Market Prediction are interesting reads. Learn all you can about the macroeconomic drivers before you buy the market bottom.

The 3 and 6 month performance of oil stocks is chasing money out of energy and into tech stocks oddly enough although their earnings and over valuation is a concern.   Facebook stock price has plummetted this year mostly due to Mark Zuckerberg’s forary in the fantasy worlds, and planning on increasing spending in it. It’s the world’s biggest gamble for 2023.

Google stock too has sunk throughout the year however during the last few weeks has rallied.  Amazon stock price has plunged 43% this year.  APPL has had a volatile year falling 16% year to date.  Those who stayed long in Tech stocks in general have suffered very badly in 2022.

There is continued interest in Tesla stock, however it is down 45% ytd and this is during a period of big support for alternative energy. It doesn’t get much better for EV automakers.  TESLA is likely over valued and could take a big tumble as auto loan rates jump and oil prices fall in the first half of 2023.

The company’s stock fell about 20% last Tuesday after its disappointing exclusion from the S&P 500 index. S&P Dow Jones Indices senior index analyst Howard Silverblatt on Friday declined to say why Tesla was not added to the S&P 500 which leads to speculation it may have been politically motivated.

For long term investors, it may be getting to where it could be a great buy the dip stock.

The outlook for these next 3 months is downward, however investor confidence and the mid terms will help usee the  next 6 months into 2023. Some investors looking ahead to the next 5 years will find some great buy the dip opportunities.

S&P Market Sectors

This week materials, industrials, and consumer staples are in demand.  Investors have lost a little confidence in energy even as oil price stick around the $80 a barrel price level. They’ve been very volatile as oil has become a political football and the President continues the attack on the US energy industry while making deals with Venezuela and Iran.

S&P Sectors December.
S&P Sectors December. Screenshot courtesy of CNBC.

View the best and worst performing stocks below. For those with cash, a buy the dip opportunity is coming.

There are divided views of what will happen in 2023. Not all the factors are in for next year. For the short term however, the big question is whether to sell.

Most commentators this week are discussing how the markets will fall to new 2022 lows. After J Powell’s rate announcement, the Dow has fallen about 780 points, while the S&P is down about 140 points. That’s minor given the stated intent of the FED. Everyone’s waiting for things to start breaking.

UBS director Art Cashin appearing on CNBC’s “Squawk on the Street says “I think we may even go back and retest the June lows.” In fact, he was right, it did last week.  And Goldman Sachs Chief Economist Jan Hatzius in an interview with Yahoo Finance Live said he expects a lengthy period of below-trend growth.

Investors will grow more cautious as the Fed pushes the central rate up. The next rate hike in October could push things over the edge. The 3 month to 6 month forecast looks dim.  Those still investing are looking for hedging strategies or for defensive stocks to get through the recession.

Oil prices have reclined given new fears of a recession and strong demand reduction across Europe.  The natural gas price will pressure many Americans finances this winter and work to push inflation back up. This will embarrass the Fed. Some like JP Morgan believe oil prices could rocket when oil production is cut by 3 to 5 million barrels per day. That would push oil prices up above $200 a barrel. China’s demand will grow with the resumption of their economy.

Persistent Inflation and the Fed’s Certain Response

The Fed’s goal is to lower employment and for that to happen, unemployment must grow, profits must drop and consumer and business spending must stop. Experts say the Fed is focused on unemployment numbers. The current optimistic mood will take a few months to erode, but 2023 will bring it down.

Jobs claims were down, and job growth continued in November by 263,000 so you can see the Fed will have to jump rates up high (5+%) and aim for a 6% unemployment rate.

The most recent 7.7% CPI inflation number was disappointing given how much energy costs dropped. The big news is about the housing market teetering on the edge set to tumble hard may help bring inflation down. The Fed might see this as an acceptable loss and an aid to bringing the headline inflation rate down.

Foreclosure activity in the housing market is up strongly so November’s housing market stats should be starker as more mortgage holders are unable to make their payments.

What To Take Into Account for the Stock Market Forecast?

The next 3 to 6 months look scary driven by these factors:

  • rising Fed rates — likely hike of 75 basis points, moving up to 5% in 2023
  • higher unemployment and rising job claims (although good right now)
  • wages still strong but turning downward in 2023
  • housing market failing
  • persistent high inflation
  • much lower US GDP for 3rd quarter
  • import prices declining
  • Sept Philadelphia Fed business outlook survey fell -16.1 to -9.9
  • Sept Empire manufacturing survey index rose +29.8 to -1.5
  • corporate earnings struggling for 12 months ahead
  • coming blockade of Russian oil by Europe
  • high US dollar due to high interest rate

It’s tough to predict much about the 3 month to 6 month outlook given this fall of 2022 seems to be a turning point where the economy could fall flat, or just sputter along, permanently crippled.

Expert’s 2023 Outlook Isn’t Rosy

The updated Conference Board Forecast is a little gloomy too.  They predicted a recession would begin before the end of the year.

Yet many investors are overjoyed with the crashing price of oil and gasoline which is due to weakening consumer and industrial demand. Energy and food prices might fall, but what comes with it might not be to stock market participants liking in September/October. The Conference Board projects 2023 growth will plunge to a 0.2% year-over-year rate.

Coming Market Bottom Should Create Some Excellent Opportunities

Plenty of investing gurus are suggesting we’re in a buying opportunity, while some say we haven’t seen the bottom yet. The usual bears such as Michael Burry, Jeffery Gundlach, David Rosenburg gave gloomy outlooks, supported by the last Bank of America prediction as well.

Current Major Indexes (as of Dec 3, 2022)

  • S&P 500 : 4,071.00 ↓
  • Dow Jones 34,429 ↓
  • Nasdaq : 11,461.00 ↓
  • Russell 2000 : 1,892.00 ↓
  • WTI Crude Oil : $89.34 per barrel ↑
  • Gold : $1,797.00 per ounce ↓
  • US Dollar : $104.51 ↓

This is not investing advice, but in the best scenario, December, January, and February outlook is not so hot.

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 forecast 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 portfolio.

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.
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?

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 Ahead

This week brought both anxiety and discouragement to the markets.   With Covid 19 fading, people are feeling good and they are spending their savings.  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. There’s a definite bearish outlook for housing construction stocks yet they’re not showing up as the worst performers.

Best Performing Stocks November

No rhyme or reason with the best performers. Some were in the medical and pharma industry. Nine Energy Services takes the top spot and they’ve had a great year, with stellar earnings. Nine Energy is expected to post earnings of $0.57 per share on $591.7 million in revenues.

Best performing stocks.
Best performing stocks. Screenshot courtesy of Barchart.

Worst Performing Stocks November

Energy stocks dominate the worst performing equities of late according to Barchart’s data.  See more on oil and energy stocks.  Biomedical stocks are also heavy on the downside.

Worst performing stocks.
Worst performing stocks. Screenshot courtesy of Barchart.

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 hoping this is the deepest point on the charts and stock prices will surge for the next 5 years.

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.

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.

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.

Is 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 7.7% inflation.  

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)

Additional Factors affecting the Stock Market Ahead

  • 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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