Morgan Stanley publishes forecast for the S&P 500 index for 2023

Analysts from Morgan Stanley have published a forecast for the US S&P 500 index for 2023. According to the forecast, in early 2023, the S&P 500 index could collapse by 24% from current levels. The collapse of the index will happen for the reason that American companies will reconsider the level of future income.

“In early 2023, the S&P 500 index could collapse by 24% from current levels. U.S. stocks could face a big drop in early 2023. The largest US corporations will begin to cut their future earnings forecasts for the next fiscal quarters. This will hit the value of shares,” – said chief strategist Mike Wilson of Morgan Stanley.

2023 S&P 500 Index Target by Morgan Stanley

By the end of 2023, the target level for the S&P 500 index could be 3900 points. The US stock market can expect “wild rollercoasters”. Therefore, next year will not be quiet for the stock market. Analyst warns. The bear market will continue into 2023, and the S&P 500 may show lower levels.

As of December 3, 2022, the S&P 500 index closed at 4,071 points. Mike Wilson believes that in the first four months of 2023, the index could collapse by almost a quarter of its current level. We should expect a fall in the range of 3000-3300 points. It is at this level that the downward trend in corporate earnings forecasts will culminate.

The fall will be observed across the spectrum of US stocks. Large corporations could be hit hard next year, and this applies to the technology, consumer and industrial sectors. The entire market will suffer.

However, now investors should not sell all the shares, says chief strategist Mike Wilson. “Now is not the best time to sell all stocks and run away, as the US stock market will not fall until large corporations start to reduce income,” the expert said. The expert believes that over the next few weeks, the US stock market may remain positive. Therefore, we can expect a small tactical rally in the stock market until the end of 2022.