Strategist Stifel was right about the S&P 500. How he sees the end of 2023.
After a huge rally at the start of the year, stock momentum has faltered. And they may struggle to find it again before the end of the year, according to one of the most successful market watchers of 2023.
With a tough August in the rearview mirror, the market has begun what has historically been the most painful month of the year. The bulls may still be hoping stocks will regain some of their charm, but Barry Bannister, market strategist at Stifel, says they are likely to tread water.
Bannister, who described the market movements so far this year, predicts that
Standard & Poor’s 500
To end the year 2023, not far from its current level. In a research note released on Tuesday, he stuck to his year-end target of 4,400, which would put the index around 4% below where it is now.
While the strategist spent most of the first half of the year arguing that the rally appears to be on solid footing, he has now become more cautious when it comes to expectations that market momentum could push the S&P 500 above the pre-2022 record high. downlink.
“While the focus of our research from October 2022 to June 2023 was to allay the fears of the bears, now seems a good time to examine the assumptions of bullish outliers… (who) believe the S&P 500 achieves more than 4,800 by year-end 2023 He wrote. “Our conclusion is that overly positive views in late 2023 are unlikely to materialize.”
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Bannister said that in order for the S&P 500 to regain and surpass its previous peak of 4,796.56, it would need very favorable conditions, which seem largely out of reach. The explosive growth spurred by stimulus in the age of Covid makes it difficult for companies to achieve large increases in earnings per share, while the resilience of the economy does not give the Federal Reserve enough reason to back off from raising interest rates, as some investors hope, he says. He said.
Likewise, AI may not be the savior many expect, at least without some hitches. Others have made the same point, given how positive tech news of 2023 has already affected the market.
Indeed, he said, investors would do well to remember the beginning of September 2000, when the dot-com bubble began to burst. Although the S&P 500 eventually bottomed out in October 2002, it “couldn’t reach in real terms (inflation-adjusted consumer price index) 1520.77 until December 2014.”
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Of course, Bannister doesn’t think stocks will lose for long again, and many other strategists see reason to hope that the rally will not completely run out of fuel. They say the continued downward trend on Wall Street is a contrarian sign of more gains to come, while the continued resilience of consumers could keep afloat some of the most hated stocks in 2022, such as consumer discretionary stocks.
However, with interest rates still rising, mixed economic data, and plenty of good news already priced into stocks, it wouldn’t be surprising if the rally took a bit longer to regain ground. This means that the year 2023 will not end with a bang, but with a grumbling.
Write to Teresa Rivas at teresa.rivas@barrons.com
(tags for translation)Stock Markets
