2 Big Stock Market Predictions For 2023

Investing Daily via Motley Fool ^ | 12/20/2022 | John Mackey, CEO of Whole Foods Market, Matthew Frankel, CFP

[SeekAndFind]

2022 was the worst year for the stock market since the financial crisis, fueled by a combination of rising interest rates, economic worries, war in Ukraine, inflation, and other factors. As of Dec. 20, the S&P 500 was down by more than 19% for the year.

However, with the year coming to a close, what should we expect for next year? While nobody has a crystal ball, here are a couple of my predictions for the stock market in 2023 and why I believe each one is likely.

1. The stock market will have an excellent year

My bold prediction is that the stock market will rebound sharply in 2023, with a 20% gain (or more) in the S&P 500 benchmark index.

There are a few reasons I think this is quite probable. For one thing, I feel the Federal Reserve will manage to get inflation under control faster than most experts seem to think. In fact, the Fed may have already tamed inflation if we look at the month-over-month core inflation rate of just 0.3% in November. Lower inflation could lead to the Fed lowering interest rates sooner than expected, and this lower inflation would likely lead to lower consumer interest rates for things like mortgages.

Additionally, remember that the stock market hates uncertainty, and there’s a ton of it right now. Many investors are worried about a recession, a housing crash, and more. If we get some clarity as to where the economy is heading, it would almost certainly be a positive catalyst for the market.

Finally, let’s look at the historical performance of the stock market after a losing year. Since 1965, the S&P 500 has produced a negative total return 12 times (not including 2022). In nine of the 12 cases, the S&P 500 ended the next year higher. Even including the negative years, in the average year when the S&P finished the year in negative territory, the following year saw a total return of 13.1%. In short, the historical data supports a stock market rebound.

2. Some of 2022’s worst performers will be 2023’s standouts

While I foresee the stock market having a strong year in 2023, I also think we’re going to see some of 2022’s biggest losers be among next year’s biggest winners.

One big example is e-commerce, with Amazon (NASDAQ: AMZN) being a particularly interesting stock to watch. The massive company has declined by nearly 50% in 2022, giving back all of its pandemic-era gains, on fears of a slowdown in consumer spending, rising costs, and more.

Homebuilders are another example, with the SPDR S&P Homebuilders ETF (NYSEMKT: XHB) falling by nearly 30% in 2022. Soaring home prices, combined with mortgage rates more than doubling, have resulted in lower demand and higher cancellation rates. If mortgage rates end up declining in 2023, which I believe to be quite probable, it could be a major catalyst — especially if materials costs remain low, as lumber prices just hit their lowest level since 2020.

How confident am I?

Now, I’m not an eternal optimist when it comes to the stock market by any means. In fact, some of my 2022 stock market predictions were rather negative (and turned out to be correct).

However, with signs that inflation is moderating, a strong job market, and pent-up demand for large purchases once interest rates decline and recession fears subside, there are some good reasons to believe that the market will have a strong 2023.

Having said that, there is a lot that could go wrong. There’s no guarantee inflation will be under control, and there’s a significant chance that we’ll see a deep recession (or “hard landing,” as the Fed calls it). Only time will tell, but I’m confident that the most likely direction for the stock market in 2023 is higher.

[dfwgator]

My Prediction:

Some stocks will go up, some stocks will go down.

[PeterPrinciple]

How confident am I?

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from the article.

[Go_Raiders]

There is ZERO chance of stability with Russia in Ukraine.

Too many possible negative outcomes.

[DugwayDuke]

dfwgator wrote: “My Prediction: Some stocks will go up, some stocks will go down.”

IIRC, it was Mr JP Morgan who, when asked what the DOW would do, replied: “It will fluctuate.”

[blueunicorn6]

What is it that affects the stock market?

[Flick Lives]

HODL FTX token stock for a rally in 2023! Just like Bear Sterns.

[SeekAndFind]

RE: Just like Bear Sterns.

Bear Sterns is now part of JP Morgan.

[Aevery_Freeman]

Inflation holds the seeds of its own demise.

When people can't afford products, prices fall. That's the reason gasoline prices have declined.

My personal prediction is that a brand new 1.85T spending bill, billions wasted in a proxy war with White, Christian Russia and the "woke" overhaul of everything will lead us into a full-blown depression.

[1Old Pro]

My Prediction: Some stocks will go up, some stocks will go down.

My prediction: There are 3 entities involved in a securities transaction, the buyer, the seller and the market maker, one of them will profit on every transaction.

[ProtectOurFreedom]

...remember that the stock market hates uncertainty, and there’s a ton of it right now. Many investors are worried about a recession, a housing crash, and more.

I am shocked that they didn't point out that "more" means BIDEN and CONGRESS?

[SeekAndFind]

RE: My personal prediction is that a brand new 1.85T spending ...

Well, see here:

https://freerepublic.com/focus/f-news/4118158/posts

Senate has not passed it ( yet ).

[Yardstick]

Amazon (NASDAQ: AMZN) being a particularly interesting stock to watch. The massive company has declined by nearly 50% in 2022...
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That does sound like a bit of a bargain.

[dfwgator]

"We will take our client’s money and invest it. Part of the profit we will keep for ourselves; the rest we will give to the client."

"We will make a list of our clients, and how much money each of them has given us to invest. We will keep this list in a safe place. If we have time, we will make a copy of the list, in case something happens to the first list."

"If a client is talking, and you’re not listening, and he notices, and he accuses you of not listening, just say, “Sure, I’ve been listening, I’ve heard every word you’ve said.” If he then says, “Alright, tell me what I’ve been talking about.” Just say, “You’ve been talking about your investments. Which stocks to buy and so on.” That way the client will think you’ve been listening, even though you haven’t."

"Don’t leave the client’s money lying around. Keep it in a safe place. For example: where we keep the list."

[Pete Dovgan]

My Prediction(s):
Stocks will be increased or same across the board at the end of the year (Dow)
There will be bankrupt startup companies by fall, and those stock values will got to zero.
The US currency will continue to devalue.
The workforce participation rate will be lower by the end of the year.
No one from the FBI, DOJ, IRS other other agencies which used taxpayer money to change elections and censure people will be prosecuted.

[spokeshave]

Dow down another 400 points this morning

[Flick Lives]

RE: My personal prediction is that a brand new 1.85T spending ...

Well, see here:

https://freerepublic.com/focus/f-news/4118158/posts

Senate has not passed it ( yet ).

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It’s all just political theater as these parasites, masquerading as out elected officials, wrangle for the largest cut of the open graft for their connected friends.

[1FreeAmerican]

This article is written by the CEO of Whole Foods, which is owned by Amazon.

But I agree it might be a bargain.

[Leaning Right]

My prediction: Ask 5 economists a question, and you will get 8 different answers.

[Alberta's Child]

I think 2023 will be marked by a widespread realization that e-commerce has hit a wall and has limited future growth prospects.

I believe Amazon’s stock price will be lower on this date in 2023 than it is today — to reflect this reality.