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Equity Market Outlook 1Q23

Economic and Market Review: Key Considerations for Equity Investors

After rising interest rates, persistent inflation and geopolitical turmoil pounded equity investors in 2022, we wish we could report that a rebound appears just around the bend. Alas, we believe macroeconomic indicators offer little to cheer about in the first quarter of 2023—and perhaps through the remainder of the year. Despite Wall Street’s rosier prognostications, we think that a challenging mix of alarming economic inequality, monetary policy headwinds and poor earnings quality will put increasing pressure on corporate profits and likely lead to even lower equity returns in the near term. We anticipate the bear market to continue in 2023 and believe the S&P 500 Index could trough around 3000. (For additional context, see our 3Q 2022 and 4Q 2022 Equity Outlook reports.)