SFS Insights

Positive January, Positive Year?

January 27th 2023

U.S. Economy. Our take: The U.S. economy either narrowly avoids recession or enters a mild and short-lived recession in the early-to-middle portion of 2023. Easing inflation pressures and a stable job market, with only modest additional tightening from the Fed, are keys to limiting the severity of an economic downturn.

Federal Reserve. Our take: How the diverging policy expectations between the market and Fed get resolved boils down to the rhetorical glass half-full or glass half-empty question. Our expectation is the Fed will stop hiking rates in March after two more 25 basis point (0.25%) hikes and will be a positive catalyst for stock market performance in the coming year.

Earnings. Our take: Markets may be pleasantly surprised by a modest, rather than significant, earnings decline in 2023 supported by strong revenue, cost controls, and a healthy U.S. consumer. LPL Research expects earnings resilience to be supportive of stocks later this year.

Recession fears appear to have moderately waned as JP Morgan reports its model of market metrics currently shows less than a 50% chance of a global recession, which is down from 98% in October.

When stocks are up in January, the rest of the year is higher 86% of the time and up 11.9% on average. If lower? Only 2.1% and 60% of the time.

As of January 25, 2023, the S&P 500 is up 4.69% year to date.

Robert Schermerhorn, CFP®

Jamie Usas, CFP®

Operations Manager

Amanda Friedman

Wealth Consultant

Andrew Chapman, CFP®

Operations Research Associate

Lauren Bliss

Office Coordinator

Saratoga Financial Services

18 Division Street, Suite 305

Saratoga Springs, NY 12866

Phone: (518) 584-2555

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