2023 is turning out to be a better year for stocks than anyone predicted.This story is available exclusively to Insider subscribers.The S&P 500 has entered bull-market territory thanks to a small handful of tech stocks.Investors should turn to the stocks that have lagged the latest rally but still have room to rise.
But with just a handful of stocks powering the moves higher, investors are beginning to wonder if the bull market is sustainable, or if it's heading for a cliff. "In this 'soft landing' base case, we forecast S&P 500 EPS will grow by 1% to $224 in 2023, well above the top-down consensus forecast of $206 and slightly above the bottom-up consensus of $221," Kostin wrote."Following 1Q earnings season, we continue to believe that the worst of the negative revision cycle is behind us, and the trajectory of analyst earnings estimates has indeed improved in recent weeks.
While parallels to a major market crash may give investors pause, Kostin noted that it may actually be a good thing. "If economic growth data remain resilient and inflation continues to soften in line with our economists' forecast, a declining equity risk premium will likely offset slightly higher real interest rates and support current equity multiples," he wrote.
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