6 Experts Who Got the 2023 Stock Market Wrong

Who doesn’t love a good prediction? The notion that somebody can divine the future — and that we might profit from such soothsayers — is irresistible.

Unfortunately, nobody has a crystal ball. That fact often becomes plainly evident this time of year when we look back at “expert” predictions and find that most of them turned out to be little more than fairy tales.

Last year’s stock market performance is a prime example of this truth. By the end of 2023, the S&P 500 index stood at 4,769.83 points — up sharply from 3,839.5, where the market closed in 2022.

All told, the S&P rose 24.2% in 2023. Almost nobody forecast such an increase, or anything even close to it.

Here are some of the expert forecasts that missed the mark last year.

Bank of America

This expert’s prediction for where the S&P would end 2023: 4,000

In late 2022, Bank of America was declaring that a recession in the U.S. and elsewhere was “all but inevitable” and likely to occur in the first half of 2023. Candace Browning, head of Bank of America Global Research, said the following:

“Next year will continue to present uncertainties in the markets but also opportunities for investors willing to be patient and choose their spots carefully.”

As it turned out, choosing spots carefully was unnecessary. Anybody who bought an S&P 500 index fund in January and then left that investment alone for the rest of the year saw massive returns as the S&P surged well past Bank of America’s prediction of a 4,000 finish.

Comerica

This expert’s prediction for where the S&P would end 2023: 4,100-4,200

Like Bank of America, the experts at Comerica expected a U.S. recession in the first half of 2023. They forecast the stock market to record a modest gain for the year, finishing around 4,100 to 4,200.

To its credit, the team at Comerica did acknowledge that markets might finish at about 4,800 — close to where the market actually ended up — if the Federal Reserve was able to negotiate a so-called “soft landing” and keep the economy out of recession.

However, Comerica added a skeptical note about this possibility, giving it just a 10% chance of coming to pass:

“As encouraging as this scenario sounds, we believe it remains the least likely to materialize.”

JPMorgan

This expert’s prediction for where the S&P would end 2023: 4,200-4,300

JPMorgan‘s forecast turned out to be more accurate than Comerica’s but not by much.

As late as April — after stocks already had jumped out to an 8% gain in the first quarter of the year — JPMorgan was holding to its 2022 year-end prediction that the S&P would finish 2023 in the 4,200-4,300 range.

JPMorgan said it expected the index to “trade in a tight range between 3,800-4,200” for most of the year, “offering only modest upside” from its April levels.

In reality, the S&P had a lot of room to run.

BMO

This expert’s prediction for where the S&P would end 2023: 4,300

On a positive note, BMO got one thing right: It predicted a December rally in the S&P 500, and that’s exactly what happened.

Alas, BMO also expected the stock market to finish at 4,300, well below where it ended up. As 2023 dawned, BMO stated that “for the first time in many years, our enthusiasm for stock market performance potential next year is relatively tempered.”

BMO did suggest that the S&P could outperform if the Fed “gets policy spot on.” However, the experts at BMO also didn’t have much hope that the market would actually surprise and exceed the firm’s forecast:

“Unfortunately, we believe it will be difficult for stocks to finish 2023 much higher than current and anticipated levels given the ongoing tug of war between Fed messaging and market expectations.”

Oppenheimer

This expert’s prediction for where the S&P would end 2023: 4,400

Oppenheimer‘s forecast wasn’t an outright clunker. The firm expected stocks to rise 15% in 2023, which made it much closer to the mark than many of its competitors.

Still, that leaves a gap of about 9% between forecast and eventual reality.

As 2022 came to a close, Oppenheimer was suggesting that “right-sizing expectations” was the best approach for investors throughout 2023. Keeping expectations modest is usually good advice.

However, those who were resigned to unexceptional returns last year were pleasantly surprised.

Wells Fargo

This expert’s prediction for where the S&P would end 2023: 4,300-4,500

Of all the experts on this list, Wells Fargo did the best job with its forecast. Yet, it still underestimated how strongly stocks would perform.

Like many other market watchers, Wells Fargo expected a recession in 2023, but that never materialized. So while the team at Wells Fargo correctly predicted stocks would end the year strong, it is likely that the error in forecasting a recession caused it to underestimate returns overall.