Stock markets not only in the United States have had their worst year since the 2008 financial crisis erupted. Indeed, having written off around 20 percent for the whole of 2022, technology degrees have plunged even more. What will affect stock markets in the year ahead?
Recession, or merely a slowdown?
The crucial question, experts say, will be whether the United States economy plunges into recession or there will only be a slowdown in economic growth. Indeed, history shows that no bear market bounced from the bottom before the economic recession began. And if a recession does occur, the stock market decline will most likely continue.
Dependence on inflation
Immediately related to this is the development of inflation. While this has probably culminated in the United States, it still lacks many percentage points to return to the target level of 2 percent. And if inflation does not fall vigorously, the central bank’s tightening of monetary policy screws by the Fed will most likely continue, again playing against stock markets.
Thus, fundamentals can become a certain bailout. That is, the financial results of specific firms to which investors will react. But it is a question of whether companies will thrive if the economy enters recession.