Why the S&P 500 May Have Peaked for 2023: Bob Doll

What You Need to Know

Breaking the October 2022 S&P 500 low is unlikely but possible, says the longtime market prognosticator.
Capital preservation should be investors’ priority unless a soft landing clearly materializes, he writes.
Sticky inflation, tight monetary policy, and the lagged effects of current economic policies make a recession likely in the near future, he says.

The S&P 500’s year-to-date high, 4,589 on July 31, may have been the peak for 2023, according to Bob Doll, Crossmark Global Investments’ chief investment officer.

Doll, a longtime prognosticator of financial markets who is known for his annual Ten Predictions lists, said he wasn’t optimistic about an economic soft landing.

“Given the lagged effects of monetary policy, and the stickier persistence of inflation and valuation levels, it is difficult to build a bullish narrative,” he wrote in his weekly Doll’s Deliberations newsletter, released Monday.

“Until a recession is more obvious, we expect the stock market to tread water between S&P 4,200 and 4,600 as it has done since June,” Doll added. 

Crossmark, which suggests that investors focus on capital preservation, projects the index to end the year at 4,200, he said, explaining that it’s unclear when a recession will start but that a slowdown will become more evident.

Further downside is likely if a recession develops and companies lower earnings estimates, according to Doll, who does expect a downturn in the “not-too-distant future.”