Coinspeaker Advent Calendar: S&P 500 Expectations 2023

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by Godfrey Benjamin · 3 min read
Coinspeaker Advent Calendar: S&P 500 Expectations 2023
Photo: Depositphotos

The S&P 500 is likely to bounce back from its current low as the index has not recorded a back-to-back annual slump since 2002.

Dear readers, welcome to another episode of the Coinspeaker Advent Calendar. Today, we will explore the last of the three major United States market indexes, the S&P 500 Index in 2023.

Thus far in this Advent Calendar, we have been able to bring some cryptocurrencies, commodities, and indices that are either worth investing in in the new year, or which investors need to steer clear of. The reality is that the coming year may have some spillover economic turmoil from what was experienced this year.

As an investment to place a bet on, the S&P 500 is a relatively robust index that tracks the performance of the 500 largest stocks trading either on the New York Stock Exchange (NYSE) or the Nasdaq Global Select Market. Examples of companies featured in the S&P 500 include American Airlines Group Inc (NASDAQ: AAL), Arch Capital Group Ltd (NASDAQ: ACGL), Berkshire Hathaway Inc (NYSE: BRK.A), and Eli Lilly And Co (NYSE: LLY) amongst others.

Investing in the S&P 500 is like betting on all of the stocks, and this can create a bearish or bullish contagion depending on the overall trend in the economy and the response of the constituent stocks at a time.

The S&P 500 in 2023: Growth Record and Future Potentials

The S&P 500 has been used to track the performance of its constituent stocks for decades, a time that comes off with positive and negative growth tracks. Looking at the historic price trend of the S&P 500, there has been an annual positive growth trend since 2009, although the 2018 fiscal year ended with a 4.38% slump.

The impressive performance of the index which closed upward at 18.40% and 28.71% in 2020 and 2021, one of the most economically distressing years this decade shows the resilience of the index, and how good of an investment opportunity it can chart for investors.

However, there seems to be a very bearish capitulation at the moment with the S&P 500 set to close this year with a 17% slump, its first double-digital slump since 2008. The consistent interest rate hikes from the US Federal Reserve, a move that was precipitated by growing inflation have negatively impacted growth stocks and their associated indices.

The increased interest rates will, however, help stocks in general from next year, and the chances that inflation will be tapered down are high which is good for the S&P 500 bottom line as a whole.

That being said, the S&P 500 is also likely to bounce back from its current low as the index has not recorded a back-to-back annual slump since 2002. Chances are that repeating that bearish stride is unlikely, and despite the economic headwinds that may be experienced next year, the S&P 500 is bound to close the year on a positive note.

The S&P 500 has a bigger stock cushion than the Dow Jones Industrial Average (INDEXDJX: .DJI) and the Nasdaq Composite (INDEXNASDAQ: .IXIC), and as such, offers a better safety option for investors. To our readers who may want to inject capital into the index funds tracking the S&P 500, in-depth research and an appropriate risk management measure are advocated.

Here is the wrap for today’s episode, stay tuned as we bring you another informative content tomorrow.

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