S&P 500 could rally more than 20% in 2023, says market strategist: ‘Similar to 1982 when stocks went nearly vertical’

the stock market has been Started 2023 on a positive note, Raising hopes of revival after a dismal 2022 performance.

What happened: S&P 500 Index May grow more than 20% this year, according to the rule of the first five days, fundstrathead of research tom lee tweeted on Tuesday. When the S&P 500 index is negative in the previous year and gains more than 1.4% for the first five days of the following year, the average annual return is about 26.4%, he said.

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Lee said the S&P 500 index is up nearly 5% year-to-date, which has far outpaced the full-year return on cash, bonds and credit, with 11 more months to go. He added that the S&P 500 intraday low of $3,491.58 on October 13, 2022, is being seen as a bullish low. The fundamental case is based on the retreat of consumer price inflation since October.

The Fed’s unexpected error at the December FOMC meeting, where it raised interest rates by 50 basis points, sent a message that inflation was hot, sending stocks falling sharply in December. “If the market’s outlook on inflation turns bearish, investors will arguably move beyond the earnings ‘valley’ and focus on a more predictable/potentially easier Fed,” he said.

“As such, we think 2023 is arguably similar to 1982 when stocks went nearly vertical.”

The stock equity market started a great rally in 1982 when the Fed began lowering rates steadily after reining in inflation. The fed funds rate fell from a peak of 20% to 8.5% by the end of 1982.

Fed likely to correct course: Lee argued in terms of declining volatility. They expect the Fed to make a “course correction,” meaning that financial conditions will ease and/or the CBOE Volatility Index, or VIX, will fall.

He said that when the S&P 500 index is negative in the past year and VI is down in the current year, the average return would be 22.2%. Equities are arguing that “inflation turned out to be transitory” rather than “the fall in stocks due to falling EPS,” Lee said.

Price Action: SPDR S&P 500 ETF Trust Detective According to, Tuesday’s session ended with a decline of 0.11% at $400.20. Benzinga Pro Data.

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