Expect continued ‘tug-of-war’ between Fed and economic data in 2023, says B. Riley Wealth’s Hogan
Don’t be surprised if the market volatility experienced in 2022 continues into the new year, according to Art Hogan, chief market strategist at B. Riley Financial.
“The market has been in a tug-of-war between better-than-feared economic data juxtaposed with concerns about the potential for the Fed to over-tighten monetary policy and push the economy into a recession,” he wrote in a note to clients Friday. “That tug-of-war will likely continue in the first quarter of 2023 unless and until the Fed gets to their terminal fed funds rate.
Investors should expect a “bumpy ride” within the first few months of the year as the central bank grinds toward its terminal fed funds rate.
“Weaker economic trends will likely form heading into 2023 as the Fed battles inflation, but a mild recession may help set stocks up for a better second half of the year,” he said.
Given this backdrop, Hogan recommends a “barbell” investing approach, with a focus on energy, staples and healthcare. On the other end, investors should look for well-priced growth companies that have undergone a price-to-earnings multiple contraction. These companies should offer balance sheet liquidity and strong free cash flows, with leadership roles in their sectors.
— Samantha Subin
Where the major averages stand
Here’s where the major averages stand heading into one of the final trading weeks of 2022
Dow Jones Industrial Average:
- Down 4.83% for December
- 10.91% off its record high
- Down 9.41% for the year
S&P 500
- Down 5.58% this month
- Sits 20.05% off its record highs
- Down 19.17% for 2022
Nasdaq Composite:
- Down 6.65% this month
- 32.68% off its highs
- Down 31.57% for the year
— Samantha Subin, Chris Hayes
Stock futures open slightly lower
Stock futures opened slightly lower to start the week.
Futures tied to the Dow Jones Industrial Average fell 18 points, or 0.05%. S&P 500 and Nasdaq 100 futures slipped 0.04% and 0.05%, respectively.
— Samantha Subin
