Whether the downturn this year is about to finish is the largest unanswered question in the stock market. The S&P 500 has decreased 17% thus far this year.
Portfolio manager Tim Ghriskey of Ingalls & Snyder: “We are very certain that the market will increase over time. Having said that, this year has seen a significant drop. We continue to predict significant volatility. The Federal Reserve established a boundary. It won’t give up on raising interest rates to combat inflation. Although it would be nice to believe that the market has bottomed, this has been said numerous times throughout the downturn. We are not entering with both feet.
Independent financial advisor Mick Heyman: “A bear market is currently underway. Although it’s definitely not over yet, I believe the worst is almost behind us. The situation won’t significantly improve until inflation is under control. However, I have no concerns about the economy. I anticipate any recession to be minor. In my opinion, the economy won’t be significantly harmed by Fed rate increases.
For the time being, Goldman Sachs is pessimistic. Goldman strategists recently stated in a commentary that “the circumstances that are normally consistent with an equity bottom have not yet been reached.”
Before a lasting recovery starts, “we would expect lower valuations (associated with recessionary outcomes), a trough in the speed of growth degradation, and a peak in interest rates.”
According to the experts, the market will be impacted by rising interest rates. Since March, the Federal Reserve has increased interest rates by 3.75 percentage points, and experts predict that it will increase rates by another 0.5 percentage point next month.
“The speed of the rise in interest rates (rather than their absolute level) has the potential to do more damage, as investors are likely to increasingly focus on growth and earnings weakness,” the strategists said.
“We continue to think that the near-term path for equity markets is likely to be volatile and down before reaching a final trough in 2023.”
They do anticipate a rebound next year. But, “we expect overall returns between now and the end of next year to be relatively low.”
