April 2023 stock market outlook | What is next for stocks | Fidelity (2024)

FAQs

April 2023 stock market outlook | What is next for stocks | Fidelity? ›

For calendar-year 2023, the consensus earnings estimate is for a 2% contraction. But that estimate is still coming down, and based on historical patterns, could continue to do so.

Looking ahead to second-quarter reports, analysts are calling for S&P 500 earnings to fall 6.4% compared to a year ago. Fortunately, analysts are projecting S&P 500 earnings growth will rebound back into positive territory in the second half of 2023.

Markets are pricing in a peak rate of 3.5%–3.75%. Our base case includes a recession in the second half of the year and full-year GDP growth around 0.5%. Although activity has been somewhat stronger than expected, we see a likely further tightening in financial and credit conditions as a strong opposing force.

2023 will likely be better than 2022, but investors shouldn't get too comfortable. With 2022 and all the market losses it brought now in the rear view mirror, investors are looking ahead. After ending the year down nearly 20%, the S&P 500 index is in the green for 2023.

The stock market is poised for a strong 2024 as corporate earnings are poised to impress. "Earnings are likely to outpace the economy in 2024," Bank of America's Savita Subramanian said in a Monday note. Also helping the outlook for stocks is the trillions of dollars of sidelined cash that could get invested.

Since 1928, the S&P 500 has had an average monthly gain of 1.4% for April, according to an analysis by Yardeni Research. That makes April the second-best month for the index in that period, with July taking the lead at 1.7%.

Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent.

“The bear [market] is almost over, and a new exciting bull market awaits in the second half of 2023,” he said, pointing to potential in technology stocks in particular.

What stocks should I watch in May 2023? ›

The Dow Jones Industrial Average remains in rally mode into the second quarter of 2023, above its 50-day moving average and sharply off its mid-October lows. The best Dow Jones stocks to buy and watch in May 2023 are Apple (AAPL), Boeing (BA), Microsoft (MSFT), Salesforce (CRM) and Visa (V).

Wall Street sets North Face stock price for the next 12 months. “I predict that Amazon's stock price will reach $120 by the end of 2023. This represents a year-to-year increase of 43%.”

Investors should expect the bear market to persist throughout 2023. The Federal Reserve's interest rate hikes should help to stabilize the economy at some point in 2023. This would lead to a potential market recovery.

Wall Street analysts expect companies in the S&P 500 to boost earnings by 1.5% in 2023, according to Refinitiv. “In a plain-vanilla recession, earnings go down 20%. We've never had a recession where earnings were up at all,” Rosenberg told MarketWatch, calling this year's forecasts a “glaring anomaly.”

In a nutshell, nobody knows when the stock market will recover and start reaching new all-time highs. It could happen in a year or so if things go very well economically, or it could take several years. After the dot-com crash, it took some solid companies a long time to get back to where they were.

U.S. equities may disappoint in 2023, but patient investors can find potential income and returns in other markets. A grueling bear market, touched off by decades-high inflation and an aggressive Federal Reserve response, made 2022 one of the most challenging years for investment returns in the last half century.

The updated Dow Jones price prediction for 2024 is $37,877. Long Forecast expects Dow Jones to trade at 33,372 points by the end of Q2 2023 and around 35,000 points by the end of 2023. The maximum of the year should be 36,770.

Analysts are forecasting full-year profit growth for 2023 of just 1.2%. At the same time, the S&P 500's forward 12-month price-to-earnings ratio is now at 19 compared with 17 at the end of 2022 and a long-term average of about 16, according to Refinitiv data.

How much will stocks increase in 5 years? ›

September is traditionally thought to be a down month. October, too, has seen record drops of 19.7% and 21.5% in 1907, 1929, and 1987.3 These mark the onset of the Panic of 1907, the Great Depression, and Black Monday. As a result, some traders believe that September and October are the best months to sell stocks.

April is usually the Dow's best month. Here's why it typically gains.

Best time of the year to buy stocks. With the turn of the year comes optimism and new cash infusions, making December and January months that have historically seen stocks rise. April also tends to be a strong month for stocks.

The growth profile will show divergence: the Euro area will likely face a mild recession into late 2022/early 2023, while the U.S. is expected to slide into recession in late 2023. In currency markets, further dollar strength is still expected in 2023, but of a lower magnitude and different composition than in 2022.

There's good and bad news about the market and economy. The bad news is that a recession is looking more likely, with experts at JPMorgan Chase projecting a higher than 50% chance it will happen sometime in 2023. But the good news is that a bull market is coming -- perhaps sooner than you expect.

Bear markets tend to be short-lived.

The average length of a bear market is 292 days, or about 9.7 months. That's significantly shorter than the average length of a bull market, which is 992 days or 2.7 years. Every 3.5 years: That's the long-term average frequency between bear markets.

"Sell in May and go away" is an adage referring to the historically weaker performance of stocks from May to October compared with the other half of the year. Since 1990, the S&P 500 has averaged a return of about 2% annually from May to October, versus about 7% from November to April.

What are 10 stocks to buy in 2023? ›

By the end of 2023, projections are closer to $500 due to expectations following the current downturn. As you can see, most estimates believe Amazon will outperform the market for years to come. And I believe you will see Amazon stock back above $1,000 per share by 2025 or sooner.

Assuming that it meets analysts' expectations for 2024 and continues to grow its top line at a CAGR of 10% through 2027, it could generate over $850 billion in revenue by the final year. If it's still trading at about two times sales, its market capitalization could easily double to $1.7 trillion in five years.

With that in mind, there's a clear path for Amazon to achieve a $5 trillion valuation in the next 10 years. If it gets there, investors who buy its stock today would earn a whopping 371% return.

Healthy large cap stocks also tend to hold up relatively well during downturns. Investing in broad funds can help reduce recession risk through diversification. Bonds and dividend stocks can provide income to cushion investors against downturns.

It might be worth investing in growth stocks, penny stocks, gold, real estate, and dividend stocks during a recession. However, investing in the stock market is usually a tedious process. Firstly, you need to do thorough research to ensure you're investing in profitable assets.

Riskier assets like stocks and high-yield bonds tend to lose value in a recession, while gold and U.S. Treasuries appreciate. Shares of large companies with ample, steady cash flows and dividends tend to outperform economically sensitive stocks in downturns.

Suffering a “zero” isn't always possible to avoid, but investors may consider monitoring the company's spending, revenue, and profit growth. Remember: When an investor buys a stock, and it goes up, they're being paid for taking a risk. The risk is that the stock can go to zero, and that's a very real possibility.

And while theoretically possible, the entire US stock market going to zero would be incredibly unlikely. It would, in fact, take a catastrophic event involving the total dissolution of the US government and economic system for this to occur.

Will stock market go up forever? ›

Experts say that, over the long run, you can expect stocks to rise based on their profit growth, which traditionally is every company's primary mission and which investors expect management to stay focused on.

In a best-case scenario, the U.S. will likely see a 'soft landing' with low/slow growth across 2023 before picking up in 2024. However, a downside scenario is a real possibility and could see the U.S. enter a prolonged recession lasting well into 2024, as is currently forecast for the UK and Germany.

In 2023, economic activity is projected to stagnate, with rising unemployment and falling inflation. Interest rates are projected to remain high initially and then gradually decrease in the next few years as inflation continues to slow.

Layoffs in tech and finance will spread to other sectors. After tech and finance, more sectors will have to adapt to a new reality of high interest rates and weak demand. More than a year ago, I forecast a recession would begin in the second half of 2023.

As shown in the table below, the recovery period for U.S. stocks has been as long as 15 years: In the wake of the 1929 Crash, the IA SBBI US Large Stock Index didn't fully recover until late 1944. For gold bugs, the longest recovery period spanned more than 26 years (from October 1980 until April 2007).

However, once the market starts to turn, it can recover quickly. The average recovery time for a correction is just four months! That's why investors with truly diversified portfolios may consider staying investing for the long-term.

After dropping more than 18% in 2022, the S&P 500 is now up around 6% year to date (as of May 4), leading some investors to wonder if it's safe to invest now. The short answer is "yes." The longer answer is, "yes, you should be investing regardless of market movements, if you have the means."

The S&P 500 is up about 9% so far in 2023 after falling 19.4% in 2022. Gains this year are largely thanks to big growth and technology stocks, which have rallied as other areas of the market have faltered, like regional banks.

Stocks expected to rise over next year

Through the first quarter of 2024, analysts expect the S&P 500 to climb 8 percent, to 4,289 from 3,970.99 when the survey closed on March 24. That follows a year of optimism in 2022, when each quarterly survey predicted that the market would be higher in a year.

Should I move my investments to cash 2023? ›

The answer is no, according to advisors and investment analysts. "Allocating more funds to high-yielding CDs, money market funds, or treasuries may seem prudent; however, this is a form of market timing and should be avoided," explained Jonathan Shenkman of Shenkman Wealth Management.

The S&P 500 trading at 17-18 times earnings by late 2023 — about 5.5% higher from today's level — seems quite realistic.

“The bear [market] is almost over, and a new exciting bull market awaits in the second half of 2023,” he said, pointing to potential in technology stocks in particular.

The S&P 500 was expected to end 2023 at 4,200 points, which would amount to a 9.4% increase for the calendar year, according to the median forecast of 42 strategists polled by Reuters. This forecast target is unchanged from a November 2022 poll.

To some investors, this might seem unlikely. The Dow Jones Industrial Average, an index that has astonished with its ascent over the past decade, likely will continue to astonish through the 2020s, rising to 50,000 by 2027.

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"In the first half of 2023, the S&P 500 is expected to re-test the lows of 2022, but a pivot from the Federal Reserve could drive an asset recovery later in the year, pushing the S&P 500 to 4,200 by year-end," the investment bank said in a research note.

Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent.