The year 2022 has been a disappointment for stock market investors. The S&P 500 index has declined almost 20% year-to-date. This marks the worst annual performance for the benchmark U.S. stock market index since 2008, following three consecutive years of positive returns. The global stock market has suffered a major downturn due to the high levels of inflation and aggressive tightening measures implemented by major central banks, including the Federal Reserve.
Even well-known companies such as Meta Platforms, Tesla, and Amazon have not been immune to the overall stock market selloff, with all three experiencing a drop of at least 45% year-to-date. While the decline in the S&P 500 this year has primarily been driven by inflation and central bank tightening, equity strategists predict that negative estimate revisions will contribute to the next leg lower.
The current market consensus projects S&P 500 earnings of around $216 in 2023, while more optimistic analysts forecast earnings of around $220, indicating flat growth compared to 2022. However, a more bearish group of equity analysts expects earnings per share to decrease by about 10% to $200. Morgan Stanley's Michael Wilson and Bank of America's Michael Hartnett are among the most vocal bears, with Wilson stating in September that the bear market in stocks will not be over until the S&P 500 reaches the range of 3000-3400, which he expects later in the fall.