Expect an ongoing “tug of war” between the Fed and economic data in 2023, says Hogan of B. Riley Wealth
Don’t be surprised if the market volatility seen 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 and concerns about the Fed’s potential to tighten monetary policy and push the economy into recession,” he wrote in a note to clients Friday. “This tug of war is likely to continue through the first quarter of 2023 unless the Fed hits its final rate.
Investors should expect a “bumpy ride” in the first few months of the year as the central bank heads towards interest rates.
“Weaker economic trends will likely emerge into 2023 as the Fed fights inflation, but a mild recession could help build stocks for a better second half,” he said.
With this in mind, Hogan recommends a “dumbbell” investment approach with a focus on energy, staples and health. On the other hand, investors should be on the lookout for well-valued growth companies that have seen price-to-earnings multiples down. These companies should offer balance sheet liquidity, strong free cash flows and be leaders in their sectors.
— Samantha Subin
Where the big averages stand
Here are the key averages heading into one of the final weeks of trading in 2022
Dow Jones Industry Average:
- Decrease of 4.83% for December
- 10.91% below its record high
- Down 9.41% for the year
S&P500
- Down 5.58% this month
- Is 20.05% below its record highs
- Down 19.17% for 2022
Nasdaq Composite:
- Down 6.65% this month
- 32.68% below 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 linked to the Dow Jones Industrial Average fell 18 points, or 0.05%. The S&P 500 and Nasdaq 100 futures were down 0.04% and 0.05%, respectively.
— Samantha Subin