Stock Market Forecast for Next 3 Months

3 Month Stock Market Outlook

A good earnings report, GDP report, low FED rate increase, job jump, and low unemployment are easing the fears of a recession. And the core PCE index rose only 4.4% year over year in December as expected and under November’s 4.7% rise.

Reduced inflation means the FED may ease off on rate hikes (newest hike was only 25 points).  And more layoffs is interpreted as better profitability for corporations, although they seem to hiring back too.

What brightens the stock market forecast is investors undying optimism.  They see positives in almost every event and the market seems to halter only occasionally.

Now in February, investors are wondering whether the recent price rises are a sign to move their money into some well selected winners within the next 3 months — buying the market bottom.  The hunt for the best stocks to buy is on.

Most stock market experts including Morgan Stanley’s Mike Wilson are predicting the stock markets will plunge by spring. Wilson forecasts the S&P 500 will reach 3,900 by end of next year, and low corporate earnings will cause it.

But the surprise reports by companies such as Tesla have confounded them. In fact, the last 5 days were very upward for the Dow Jones (+1.8%), NASDAQ (+4.3%) and S&P (2.5%).

However, new reports show Americans are still holding onto $4.8 billion in cash and aren’t ready to push it into stocks in February or March.  They’re holding and there’s nothing compelling right now to make them invest.  In fact, the FED rate scare is preventing any kind of big catalyst. And if one appeared, the FED would want to kill it. Yet, there are investors buying as the rises suggest. Many are looking at bonds, but in this era, aren’t all bonds junk bonds?

Wilson doesn’t believe the bear market is over and early 2023 will likely be volatile too. That will make it confusing for most retail investors. He advises to wait for the January February earnings reports. Other experts keep promoting “value stocks” as the right choice.

This warns us that many investors/experts this week might be overlooking how depressing the higher rates and lack of support for the US economy will be.  Goldmand Sach’s chief U.S. equity strategist David Kostin, said GS believes the S&P 500 will fall about 10% to 3600 over the next three months as interest rates rise.

S&P, Dow Jones, NASDAQ last 5 days.
S&P, Dow Jones, NASDAQ last 5 days. Screenshot courtesy of Yahoo Finance.

What to Look for in the Next 3 Month Period?

  •  the Fed will keep raising the bank rate, 25 basis points in February
  • unemployment rise slightly as multinationals layoff workers
  • China continues to open its economy thus buying more products/materials
  • corporate earnings reports may not be as bright in March
  • energy prices continue to hover near 80 dollars a barrel (Biden using SPR)
  • US dollar may stay low
  • American investors stay cautious for the most part
  • those investing are trying to pick individual stocks

During August, investors thought the Bear market was done.

The Fed balance sheet reduction has begun at about $100 billion in treasuries and bonds each month.  The market’s probably haven’t factored that in.

A Crash/Deep Recession is Unlikely

Some talk about a housing crash and a stock market crash, but with so much money and consumer demand present, investors and buyers may buy these assets as they become cheaper — especially if they believe the one year, 3 year and 5 year outlook is okay.  That means prices won’t go down.  Wages are strong right now and the economy looks good, some even believe it could be a full employment recession, which doesn’t make sense.

The Republicans have won the House and they may be able to influence the Fed to abandon its obsession, and move the Dem’s focus instead on deregulation, lower taxes, increased energy supply.  These would help dampen inflation and bolster the economy.

Here we’re investigating the importance of the 3 month to 6 month forecast period. And this period will help us understand where the markets will be in the next 5 years.  Longforecast believes we’re in a sour period, and so far they’re right.  They believe markets will soar in 2023. They see the Dow, S&P and NASDAQ all soaring by mid 2023.

More predictions and stats: Definitely check out the general stock market outlook, the outlook for 2022, next 6 months, next 10 years, and find the best stocks to buy here on the stocks blog.

Top Stocks Recently

Can the top performers help you choose the best stocks going forward? They may.  The fact is, nothing much is changing  as each quarter slides by.

Top Performing Stocks.
Top Performing Stocks. Screenshot courtesy of

The Forecast for 2023

Trading Economics forecast sees all markets about 3% per quarter throughout 2023.

Stock market forecast for 2023.
Stock market forecast for 2023. Screenshot courtesy of Trading Economics.

The big 2023 event ahead is all about reality — that time when Americans come back to earth and realize the idea of $3.5 trillion spending didn’t solve the country’s fundamental problem about making things in America and not importing what it can’t afford. That’s when everyone pulls back and we’ll see some severe drops in stock prices and in home prices too.

Looking at the Russell Index and Small Caps

Small caps aren’t even on the radar as investors look to large stocks on the S&P and Dow Jones indexes. However, as this Yahoo Finance chart reveals, the real value of the stocks is showing through and some caps on the Russell may be worth a look.

Could we see a stock market crash sometime this summer?  In many ways, the economy is a house of cards so concerns of corrections and crashes aren’t ludicrous.  Few people foresaw any of the recent stock market crashes.  Some were calling for a dramatic fall because they are way over-priced based on real earnings.

We’ve had a few volatile correction periods, but as we get closer to full Corona Virus vaccine distribution, you have to think the upward momentum will really pick up by 3 months from now when investors really believe the end of the pandemic is in site.

Record New Highs Called

The stock market for the next 3 months should rise continuously, to new highs. It looks like fundamentals are beginning to drive stock prices higher. Of course, next week’s earnings reports will give a clearer picture. Goldman Sachs earlier predicted an 18% drop in the markets in the next 6 months, but revised it after the S&P surged. Live and learn.

The markets have excelled during the pandemic, not as a response to billionaire wealth, but rather to the hope of the new United States. The Dow, S&P and NASDAQ have grown 15% over the last 3 months. Stock market experts expect stocks prices to plummet but they’ve forecasted this before.

Next 6 Months

The stock markets will benefit from the recovery in the next 6 months, and are already surging.  November is a good month and this one will be too. Globally, issues of supply shortages will raise the value of commodities. Oil and natural gas prices are rocketing.

But now that Americans are returning to work and seeing clearly why a pro-American agenda is correct, we’re betting that US companies are going to soar.

The key factors in the next 3 months are:

  1. flat oil and commodity prices
  2. quickly rising Fed interest rate changes the outlook entirely on the future
  3. oil and gas cuts for Europe creates severe recessions and product shortages — a strong recession
  4. slow growth in China depresses investment in equities
  5. work at home still a thing as employers look for best talent
  6. employment rates begin to fall and wages start to turn downward
  7. wages and inflation put pressure on earnings performance

See more stock market predictions  and what’s in store for Bitcoin stocks, Oil stocks, Facebook, Tesla, Google, Amazon and Apple.  See the latest Facebook stock price, Google stock price and Tesla stock price quote.  Do you use Google finance or Yahoo finance for fast stock quotes and news?

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