Wall Street's 2022 stock market forecasts were way off. Here's what they see in 2023: Morning Brief – Yahoo Finance

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Wednesday, December 28, 2022
Today's newsletter is by Julie Hyman, anchor and correspondent at Yahoo Finance. Follow Julie on Twitter @juleshyman. Read this and more market news on the go with Yahoo Finance App.
We all have our little traditions to end a year.
Some people make resolutions, or "best of" lists.
I look back at stock market forecasts from the prior year.
Part of Wall Street strategists' job is to set targets for the S&P 500. And as equities limp toward the finish line for 2022, I wondered if anyone had seen the drop coming.
The short answer is no.
As of November 2021, the median of 12 forecasts was 4,825, according to Bloomberg. The highest was 5,300, from Brian Belski of BMO. The lowest was 4,400, from reliable bear Michael Wilson of Morgan Stanley.
With three trading days to go in 2022, the S&P 500 closed at 3,829.
To be fair, there were a lot of unpredictables this year. Unprecedented, some might say.
Russia’s invasion of Ukraine was chief among them. Investors also had to contend with China’s continuing COVID shutdown, persistent global inflation, a sharp drop in bonds along with stocks, a tech plunge, and a huge (alleged) crypto fraud. And this list is not exhaustive.
Some strategists anticipated those events — with the exception of the first — but few got it all right.
Of course, the strategists changed their forecasts as more information rolled in. By mid-September, around the time the index was making what turned out to be its lows for the year, the median of 23 forecasts had moved down to 4,300. By mid-October, it had fallen further, to 3,988.
Forecasting is especially tricky when it comes to picking the level where an index will end the year. Strategists use models with a multitude of inputs, both "top-down" (i.e. aggregate earnings estimates) and "bottoms-up" (i.e. company-specific earnings estimates).
And some strategists avoid the index-forecast game entirely.
One of them is Michael Darda of MKM Partners, who carefully couched his S&P target comments in a recent note to investors.
"Back in 2020, the S&P 500 bottomed at about 18x five-year forward estimates, which would be about 3300 or so, roughly a 14% fall from where the S&P 500 closed last week," Darda wrote. "Although this is simply a rough starting assumption (it could be worse and also could be better if we are wrong about a recession next year) keep in mind that in the event of a downturn, markets usually bottom out about two-thirds of the way through the recession (or four-to-five months before a recovery begins)."
When asked why he avoids a specific target, Darda quoted famous economist John Maynard Keynes: "Better to be roughly right than precisely wrong."
Speaking with Yahoo Finance Live on Monday, Baird’s Michael Antonelli also declined to offer an S&P 500 price target while sharing some of his 2023 projections, including his view that the Federal Reserve's next interest rate increase will be its last of this cycle.
"What you really want to dig into when it comes to a strategist's view is how adaptable they are to change," Antonelli said in a follow-up message. "Do they stick with a bullish or bearish view as the year unfolds? The best ones are open to changing their minds or admitting being wrong."
For individual investors, it might make more sense to track themes and broad predictions than to invest based on where, exactly, some expert thinks an index will end the year. And although this columnist avoids making forecasts of any kind, if nothing else, it's fun to keep track of those that do.
In that spirit, then, as of December 1, the median forecast from 17 strategists for the S&P 500 at the end of 2023 was 4,000. The highest, at 4,500, comes courtesy of Binky Chadha at Deutsche Bank. The lowest, at 3,400, comes not from Wilson of Morgan Stanley, but rather Greg Boutle at BNP Paribas. (Wilson is at 3,900, but expects a slump during the year).
Programming note: John Stolzfus, Oppenheimer Asset Management Chief Investment Strategist, will join Yahoo Finance Live at 10 a.m. ET today. His S&P 500 target for the end of 2023 is 4,400.
10:00 a.m. ET: Richmond Fed Manufacturing Index, December (-10 expected, -9 during prior month)
10:00 a.m. ET: Pending Home Sales, month-over-month, November (-1.0% expected, -4.6% during prior month)
10:00 a.m. ET: Pending Home Sales NSA, year-over-year, November (-36.7% during prior month)
No notable reports scheduled for release.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Related Quotes
The National Association of Realtors (NAR) said on Wednesday its Pending Home Sales Index, based on signed contracts, fell 4% to 73.9 last month from October's downwardly revised 77.0. November's was the lowest reading – aside from the shortlived drop in the early months of the pandemic – since NAR launched the index in 2001. Pending home sales dropped 37.8% in November on a year-on-year basis.
Semafor Business and Finance Editor Liz Hoffman joins Yahoo Finance Live to discuss the anxieties surrounding the banking industry as Goldman Sachs announces layoffs in 2023, David Solomon's performance as CEO, and the outlook for executive bonuses.
Eddie Cibrian recently denied cheating on Brandi Glanville with Piper Perabo while the two were married. Fox News Digital explores Hollywood's wildest celeb cheating scandals.
Image source: Getty Images When it comes to making investments, it's a good idea to take a long-term approach. This holds true whether you're buying stocks, index funds, or real estate. In fact, it can especially take time for homes to appreciate in value.
A powerful storm system coming out of California will spread heavy snow into the mountains of Colorado on Wednesday.
The eccentric billionaire has been dividing his time between some of the busiest companies in the world. Can he do all of this? A poll is live now, asking whether Elon Musk should hire a new CEO for Tesla.
Shares of several popular fintech stocks rode the wave upward with the broader market Thursday after new data from the Labor Department indicated that the red-hot U.S. job market may be cooling a bit. As of 12:30 p.m. ET, shares of one-stop-shop financial services company SoFi (NASDAQ: SOFI) were trading nearly 4% higher, artificial intelligence-assisted lender Upstart (NASDAQ: UPST) was up by more than 4%, and insurtech company Lemonade (NYSE: LMND) was up by more than 5.5%. Investors rejoiced after new unemployment claims came in at 225,000 for the week that ended Dec. 24 — 9,000 higher than the prior week and slightly above the consensus estimate.
Skiiers and snowboarders were delighted to see fresh powder in Mammoth.
CIUDAD JUAREZ, Mexico (Reuters) -Even before the U.S. Supreme Court on Tuesday opted to keep in place a measure aimed at deterring border crossings, hundreds of migrants in northern Mexico were taking matters into their own hands to slip into the United States. The contentious pandemic-era measure known as Title 42 had been due to expire on Dec. 21, but last-minute legal stays pitched border policy into limbo and made many migrants decide they had little to lose by crossing anyway. After spending days in chilly border cities, groups of migrants from Venezuela and other countries targeted by Title 42 opted to make a run for it rather than sit out the uncertainty of the legal tug-of-war playing out in U.S. courts.
(Bloomberg) — Mortgage rates in the US rose for the first time since mid-November.Most Read from BloombergMilan Reports 50% of Passengers on China Flights Have CovidWall Street’s Top Stars Got Blindsided by 2022 Market CollapseBritain’s Youngest Workers Are Too Sick to WorkItaly Says Covid Cases on China Arrivals Are OmicronStocks Post Month’s Best Day as Rate Surge Fades: Markets WrapThe average for a 30-year, fixed loan was 6.42%, the highest since early this month and up from 6.27% last week
Toledo Police and Toledo Fire and Rescue opened criminal and disciplinary investigations after finding a hole in the ductwork over a female locker room.
Tesla's chief executive officer Elon Musk, reportedly sent a rather motivational emali to employees on Wednesday.
The New Year’s holiday covers a three-day weekend. That means different hours at some stores and the closing of some government buildings and services.
The crypto crash of this year has left few tokens untouched. But some have fared worse than others, and there remain one or two plucky outperformers.
Moqtada al-Sadr, the Muslim Shi'ite cleric who dominated Iraqi politics for two decades, seems isolated for now after his move to step back from formal politics emboldened his Iranian-backed rivals and raised the prospect of fresh factional flare-ups. Iran, which already controls dozens of heavily-armed Shi'ite militias in its oil-producing neighbour, may now have an opportunity to expand its influence over Iraq's government, a worst case scenario for the United States and its allies. Although Sadr won a parliamentary majority in a 2021 election, he chose to withdraw in August after his failed, year-long bid to form a cabinet without rivals close to Iran.
Yahoo Finance Live anchors discuss the decline in stock for Cal-Maine Foods despite topping revenue expectations.
Goldman Sachs is preparing to trim its workforce in the coming weeks, Chief Executive Officer David Solomon told staff in a year-end audio message.
Pele spent almost his entire professional club career with Santos.
ATLANTA (AP) More than one month later, Ohio State players still can't seem to shake their one loss of the season. Ohio State has lost to Michigan in back-to-back seasons, and clearly last month's ugly defeat left a mark with players. ''We feel like it's always been Ohio against the world,'' defensive end Jack Sawyer said Wednesday.
Tesla bounced early after leading a growth sell-off with Moderna and Nvidia. Many industrial and energy plays are thriving


Leave a Comment