The stock market has entered a bull market in recent months—suggesting that the year for stocks will end strong.
- The S&P 500 Index has seen 14% growth year-to-date, surpassing expectations of 9%, Stansberry Research reports.
- This gave the market a 20% improvement from its bear market in October 2022.
- Wall Street analysts have increased their profit expectations following recent earnings reports, increasing their estimates by 3%, Axios reports.
- If projections hold steady, 2023 will mark the 24th time since 1950 that the S&P 500 has seen 10% returns, signaling a 77% chance of greater improvements later in the year.
Why It’s Important
The remainder of the financial year remains clouded in uncertainty. Strong jobs reports have cut through a great deal of the pessimism and recession fears that analysts have expressed for the past year. This was further suggested by Federal Reserve Chair Jerome Powell’s decision last week to curb further interest rate hikes for the time being, suggesting that the economy could stabilize this year and allow a soft landing to occur.
These predictions preclude the possibility of a severe downturn in the meantime, which would push stock prices down—also hurting the job market and the housing market. However, historical trends would suggest that the majority of economic indicators are moving in the right direction, thanks to the resilience of consumer spending.
“It’s no secret that I’m bullish on stocks long term. But I’m not saying that more gains are a given. We still have another week and a half until the end of the month. And a sharp pullback during that time could mean that this indicator won’t trigger a signal this year. The last time stocks were up more than 10% in the first half of the year was in 2021—and it was an outlier. While the market marched higher for a few months, stocks ultimately fell 12% over the following 12 months as all major indexes entered a bear market. Still, I like our odds here,” says Stansberry Research analyst Matt McCall.