Bear Market to Last in 2023: Goldman Sachs

According to his note on Monday, Wilson’s clients have pushed back against his view of the S&P 500 falling to as low as 3,000 points in the first three months of next year — a drawdown of 24% from Friday’s close.

“What’s yet to be priced is the earnings risk and that is what ultimately will serve as the catalyst for the market to make new price lows,” he said.

Still, strategists aren’t all united about the fate of stocks after a volatile 2022.

“Three double-digit rallies this year in the S&P 500 argue a case that as difficult as 2022 has been for equity markets, there’s enough resilience to suggest that this year could be a harbinger for better times ahead,” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, wrote in a note on Monday.

Meanwhile, Goldman’s strategists expect Asian stocks to outperform next year, with the MSCI Asia-Pacific ex-Japan ending the year 11% higher at 550 points.

Their peers at Citigroup Inc. turned more bullish on Chinese stocks today, saying Beijing’s pivots on Covid Zero and property should lift earnings.

With the bear market still in full swing for now, Oppenheimer and his team recommended focusing on quality companies with strong balance sheets and stable margins, as well as those with deep value and energy and resources stocks, where valuation risks are limited.

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