Wall Street's Terrible At Forecasting Stocks: CNN

December is a month full of market predictions for the year to come. Everyone, from economists to analysts to grocers, seems to have a strong feeling about how stocks will behave going forward. Here’s the thing-- they’re almost always wrong—wrote Nicole Goodkind of CNN.

Photo Insert: No major analysts predicted last December that this year would (likely) be the worst for US stocks since 2008, that oil prices would shoot from $70 to $130 and then careen back to $70, and that the Federal Reserve would announce four straight historic three-quarter point interest rate hikes.

What’s happening: Last year, Goldman Sachs analysts predicted that the S&P 500 would close out 2022 at 5,100 points. Morgan Stanley predicted a more bearish 4,400. The S&P 500 closed on Tuesday at 3,829.

No major analysts predicted last December that this year would (likely) be the worst for US stocks since 2008, that oil prices would shoot from $70 to $130 and then careen back to $70, and that the Federal Reserve would announce four straight historic three-quarter point interest rate hikes.

Geopolitical chaos, global pandemics, and extreme weather events have created unexpected and outsized head and tailwinds – creating extremely turbulent rides for markets.

“As they take stock of this year, investors should strike a certain sense of humility as they peer into next,” wrote Christopher Smart, chief global strategist at Barings in a recent note.

“They may take some consolation that outside US intelligence circles, almost no one expected a Russian invasion last December. But that will be small consolation amid difficult markets and evanescent returns.”

Most analysts seem to expect that inflation risks will subside next year, but they’re still asking investors to wear their seatbelts at all times.

With those caveats, let’s get to Wall Street’s predictions. The numbers: Forecasts for where the S&P 500 will finish 2023 vary greatly.

Below is a roundup of estimates made by five major banks, reported in notes and year-end reports. You can see that they’re largely hovering around 4,000. (Note: these predictions are subject to change).

Barclays: 3,725; Citi: 3,900; Bank of America: 4,000; Goldman Sachs: 4,000, and; JPMorgan: 4,200. The bottom line: Take these predictions with a grain of salt.

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