Stock Market Forecast
The US banking crisis is revealing cracks in the financial system that’s creating increasing concerns for investors around the globe.
While optimism has been strong and pointing to a turnaround within 6 months, quantitative tightening (credit squeeze) combined with fast rising interest rates is souring the outlook. And there’s more as you’ll discover.
This week’s calamity resulting from the failure of Signature Bank and SVB has caused US banking regulators to turn the screws tighter on regulation, and with credit shocks already happening, forecasters and fund managers are sensing something very worrying. Even though the markets moved back to their positive direction today, more bank events may happen as rates rise and the zero rate environment disappears into the past.
So while the initial runs on the banks are covered by Biden and the FDIC, it’s the run on the regional banks and the stock market that could be the big breakage ahead that’s feared. Bailing out some banks too, sends negative signals to the markets. And overseas in Europe, poor financial results and rising interest rates are pushing banks there into troubled waters. Euro stocks markets have plummeted the last two days as pessimism sinks in.
The plunge in the Dow Jones, S&P, NASDAQ and Russell 2000 could slide much further even if the FED decides to ease off on rates temporarily. While many forecasters have predicted much better conditions in the 2nd half of 2023, we still have to get there.
Bank & Financial Stocks
As the chart from Barchart.com shows, financial stocks have been hit really hard. Regional US banks are in the spotlight and all likely under a fear of being contagion and launching a major run of bank withdrawals, and drying up of incoming deposits. Rising rates could be the tipping point. It will be interesting to see how banks maneuver such a treacherous financial situation.
The FED wanted to push till something breaks, but can they control a chain of breakage that might happen? Do they care, because they’re obsessed with inflation and the unemployment rate. As one financial guru stated on CNBC today, a small vase has just fallen from the open window.
Major Indexes This Week
Despite the drop in the last two days, the major indexes are down just a little in the last week. Yet the volatility tells you investors are confused and trading out of desperation not strength and purpose. Even investors and hedge fund managers alike might be considering abandoning their recently adopted 5 year and 10 year goals.
The 3 month forecast is definitely looking shaky and even the 6 month predictions are being brought down by this week’s worries. You’ve likely seen the plunge in oil prices too. Pushing oil down to $60 a barrel is risky since the industry apparent can’t be operated at that price. A collapse of the oil service companies, pipelines, and producers, etc., would result in excessive oil prices later this year.
The traditional banking systems trouble is resulting in a rebound in BTC Bitcoin stock. It’s risen back to $24,000. Surprise, that’s up 50% since January. Conservative investors were focusing on the post 6 month period to the 5 year and 10 year forecasts, to cover their real concern — retirement wealth. But this week’s events unearth big worries, that we might be seeing 2008 type declines.
On Fox Business, Stockmarket Cycles editor and publisher Peter Eliade’s says the markets will likely hit the lows of 2009. Danny Moses, Moses Ventures founder, speaking with CNBC’s Melissa Lee says the FED has broken something.
The US Debt Crisis
Hidden now by the headlines, is the US debt repayment crisis. Biden is asking for a 6.8 billion spend even while the debt limit has been reached. The Republicans (and many democrats apparently don’t like the big spending) want deep cuts in spending, particularly in vanity projects that draw votes for the dems. This is headed for a major fight that the markets haven’t priced in as yet.
According to a US Bank report, The US treasury takes in huge amounts of tax in the first half of the year which should keep the government running until June, 2023. That’s when a disastrous default could occur which obviously would hit investors 401ks and investments hard. Where will the money come from?
March Lost but What About the Next 3 Months?
February isn’t typically a strong month and as usual the Dow Jones, S&P, NASDAQ and Russell 2000 have been sluggish. With the Fed delivering a steady stream bad news, the market is trying ways to rationalize interest rate hikes. That’s not a productive environment, and investor confidence will falter.
China’s reopening was a source of optimism, yet a steady spate of bad news emanating from the CCP is moderating predictions of recovery.
Which are the Hottest Stocks to Buy Right Now?
Everyone is looking to pick some good ponies, and here’s the list of the hottest stocks going right now courtesy of Barchart.com.
Top Industries in March 2023
It’s wise to look closer at the industries most impacted by the financial downturn, including commodities. This plunge in the stock market signals a loss of confidence in the economic recovery and consumer spending in 2023/2024. Manufacturing, industrial services, energy, minerals, finance and consumer durables were hit the hardest — all tied into economic recovery — not just a banking profit downturn.
Forecasts for 2023
Morgan Stanley’s Mike Wilson was predicting double-digit percentage drops for stocks in early 2023. Other market prognosticators are called for recession in Q2 or Q3 of 2023. This week’s events in mid March are lending some credence to the bears.
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.
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.
Develop a stock portfolio you can be expert in, especially those sectors that are about to be the best beyond the next months to what is strong for the 5 year market outlook. 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.
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.
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.
Now in January, it looks like the FED will add .25 a couple more times and EMA should have stuck with the gloomy outlook. With the M2 money supply shrinking so fast, we wonder if there’s going to be big credit crunch in 2023? The FED’s radical last minute effort to slow inflation may out of hand already.
Eric Johnson believes this pattern, V bottoms, has happened before and investors will jump on news the Fed is done. That suggests we haven’t seen the bottom of this market. The jump he’s refering to is still coming.
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 plummeted this year mostly due to Mark Zuckerberg’s foray into 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. They’re moving their operations out of China to other cheap labor countries in Asia. 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 February 2023
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 volatile as oil has become a “vote football” and the President continues the attack on the US energy industry while making deals with Venezuela and Iran.
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.
Is oil going to rushing back? Natural gas looks like it could plummet to low lows due to an unusually warm winter. Oil too is having trouble keeping it’s head above the $80 a barrel level. Biden still has 387 million barrels left in the SPDR and he is willing to use it when needed to stop oil price rises.
Oil prices have reclined given a warm winter, demand destruction, and Biden’s big releases from the US SPDR.
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, yet latest report of 577,000 new jobs has to hit the FED hard. What level of rates would be needed to crush the spirit of American’s and the multinationals? They are laying off, only to rehire at lower wages.
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 more hikes of 25 basis points, moving up to 5% peak by summer
- levelling unemployment and rising job claims (although good right now)
- wages still strong but turning downward in 2023
- housing market failing
- persistent medium inflation
- much lower US GDP for 1st quarter and 2nd quarter 2023
- import prices rising
- January manufacturing index fell only slight to 50.8 (neutral value)
- BEA gives negative forecast for corporate earnings going forward through 2024
- high US dollar is moderating
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.
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 February 18, 2023)
- S&P 500 : 4,079.00 ↓
- Dow Jones 33,826 ↓
- Nasdaq : 11,787.00 ↓
- Russell 2000 : 1,946.00 ↓
- WTI Crude Oil : $76.33 per barrel ↓
- Gold : $1,851.00 per ounce ↓
- US Dollar : $103.88 ↑
Recession Indicators are Weaker
The latest jobs report is a strong indicator of a recession, and with the FED pulling back on interest rate growth, it’s hard to forecast a hard landing and a recession. Certainly withdrawing money from the money supply is going to reduce liquidity and access to investment and lending funds.
Yet corporations are rich after a 3 year feeding frenzy courtesy of the US government. That $7 trillion is still there in corporate bank accounts. Corporations want to buy back their own shares due to the wealth, but Biden is demanding a huge buy back tax if they do. We’ll see if that gets passed by both parties.
With all the money, and the enthusiasm over AI, and with a China reopening, demand will rise and global consumers will begin spending. Of course, that means inflation if supply sources are curtailed. The sanctions on Russia haven’t worked and Russian wealth is growing again. The attack on the Ukraine has the US and Europe to waste billions on military equipment. This will drain economies and reduce investment in businesses in the US.
A repatriation of investment, manufacturing and jobs back from Asia could also help elevate the US economy.
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.
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.
Worst Performing Stocks January
Energy stocks dominate the worst performing equities of late according to Barchart’s data. Health and therapeutics stocks seem to be getting hit hard.
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.
Stock Market Crash Possibilities
The general mood is that we’re in for a soft landing and the economy will not collapse.
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. Picking value stocks for the 5 year term seems wise.
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.
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:
- Newmont Corporation (NYSE: NEM)
- AT&T Inc. (NYSE: T)
- Medical Properties Trust, Inc. (NYSE: MPW)
- Dollar General Corporation (NYSE: DG)
- Activision Blizzard, Inc. (NASDAQ: ATVI)
- Etsy, Inc. (NASDAQ: ETSY)
- Philip Morris International Inc. (NYSE: PM)
- Oracle Corporation (NYSE: ORCL)
- Colgate-Palmolive Company (NYSE: CL)
- Adobe Inc. (NASDAQ: ADBE)
- The Procter & Gamble Company (NYSE: PG)
- Aspen Aerogels, Inc. (NYSE: ASPN)
- Zoetis Inc. (NYSE: ZTS)
Additional Factors affecting the Stock Market Ahead
- economy had a meager showing in the last 6 months
- GDP showed a little stronger in Q4 2022
- inflation has continued, although is slightly slowing to 6.8% but will persist despite Fed rate increases
- rising rates are discouraging lending and investment
- M2 money supply is shrinking at fastest rate ever
- 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
- 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 be working and will need products for their growing families. Their intent to buy homes remains strong and construction rates will grow fast through the coming spring as labor and supply shortages ease.
Bank and Broker Forecasts
Goldman Sachs was forecasting recessionary numbers with a GDP growth projection of a weak 1.75%. Actually growth could be much lower, but with less 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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