JP Morgan on December 1, 2022, cut its 2023 earnings projection for S&P 500 firms, citing weaker demand, and pricing power, limited buy-backs and margin compression.
JPM strategists now estimate that S&P 500 earnings per share for the coming year is $205, down 9% from an earlier projection of $225.
They also flagged that the S&P 500 index might retest this year’s low of 3,491.58 in the first half of 2023, as the United States Federal Reserve’s monetary policy tightening weakens the fundamentals. They said:
“This sell-off combined with disinflation, rising unemployment, and declining corporate sentiment should be enough for the Fed to start signaling a pivot, subsequently driving an asset recovery.”
They added that the index may claw back up to 4,200 by year-end, to reflect a near 3% upside from the current levels.