A trader looks at market charts on the floor of the New York Stock Exchange on January 18, 2023. ANGELA WEISS/AFP via Getty Images
- Market experts such as Marko Kolanovic, Jeremy Siegel and Lisa Shalett have warned US stocks are entering a danger zone.
- Banking turmoil and the risk of a recession have fueled some recent bearish market forecasts.
- Here you will find a selection of the latest stock market forecasts from top-class investors, analysts and other experts.
US stocks have posted impressive gains so far in 2023 despite banking chaos and mounting economic pessimism, surprising forecasters who had bearish views earlier in the year.
And now, with the second quarter underway, experts are once again taking stock of the situation and updating their forecasts to include a range of emerging risks — from a credit crunch and commercial real estate risks to ongoing financial sector jitters and the looming threat of a recession .
JPMorgan’s Marko Kolanovic, Morgan Stanley’s Lisa Shalett and FS Investments’ Troy Gayeski are among those who have warned US stocks are now entering a danger zone, while Ed Yardeni thinks there is too much pessimism about the the economy gives.
Here you will find a selection of the latest stock market forecasts from top-class investors, analysts and other experts.
Jeremy Grantham, veteran investor
The S&P 500 is likely to fall between 27% and 52% from its current level of 4,130 points, Grantham said in a recent interview.
“The best we can hope for is for this market to bottom at around 3,000,” he said. “The worst we should fear is closer to 2,000.”
Knowing that this may sound extreme, Grantham noted that the benchmark index hit 666 in 2009, meaning it will still have tripled over the past 14 years when it bottoms at 2,000 points this time.
Troy Gayeski, Chief Market Strategist at FS Investments
The stock market is poised for a sharp pullback that could send the S&P 500 down about 22% in the coming quarters, and investors should start selling their holdings right away, according to FS Investments’ chief market strategist.
“There is no reason to wait. It’s not like you’re leaving 10% on the table,” Gayeski said on a recent episode of the What Goes Up podcast. “This is a golden opportunity to use this bear market rally to de-risk ahead of potentially very painful losses over the next six, nine, 12 months.”
Marko Kolanovic, chief market strategist at JPMorgan
The stock market is underestimating the risk of an economic downturn this year, and even a mild recession would see stocks plunge 15% or more from current levels, according to JPMorgan.
“On the other hand, even a mild recession would justify a retest of previous lows and result in a loss of over 15%,” strategists led by Kolanovic wrote in an April 17 note. “We therefore maintain a defensive stance in our model portfolio this month, unchanged from last month, with an underweight in equities and an overweight in cash.”
Jeremy Siegel, Wharton Professor
The banking turmoil is threatening the broader economy and stock prices will plummet in the coming weeks, Siegel warned in his WisdomTree commentary this week. The author of “Stocks for the Long Run” warned that if investors follow the famous investment adage of “sell and walk in May,” the market could be nearing a peak.
“I see further pressure in the near term,” he wrote. “For now, it remains prudent to have a cautious near-term outlook on equities, but I’m still very bullish on the longer term.”
Lisa Shalett, chief investment officer (wealth management) at Morgan Stanley
“The bear market rally in equities continues, but much of the good news about Federal Reserve rate hikes, falling headline inflation and lower real interest rates has been priced in,” she wrote in a note Monday.
“With much optimism priced in, particularly on the sustainability of low interest rates supporting valuation extremes, we are entering a dangerous period.”
Mike Wilson, chief US equity strategist at Morgan Stanley
Investors are heading for disappointment amid the ongoing stock market rally, Wilson said, as earnings expectations are overly optimistic.
“If there’s one thing that can throw cold water on the big mega-cap rally, it’s higher yields on the back of a Fed that can’t stop rising once some investors might expect… We think the recent one Plunge in the width of the market is warning us that we are far from over the hump with this bear market.”
Ed Yardeni, President, Yardeni Research
Certainly not everyone is a stock market pessimist.
Investors could miss out on potential stock market gains if they are overly cautious about the US economy, which is likely to avoid an outright recession, Yardeni said as the S&P 500 edged closer to entering a bull market.
“I’ve been among the bulls, especially in late October…I thought there was way too much pessimism…in some of these market confidence surveys, about as much pessimism as there was in March 2009. And certainly, things are certainly not nearly as bad,” he told CNBC on Monday.
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