19 Dec 2022 1 min read

Chart of the month: the outlook for the S&P 500 isn’t very merry

By Ben Bennett

History suggests profits will come under pressure next year, leading us to underweight equities.


With labour costs rising, even a mild recession should lead to a sharp fall in profits. And if we see a 20-25% decline in S&P 500 profits, then past relationships suggest the index could also fall by 20%.

This is the key reason we’re underweight equities going into 2023 and think the S&P 500 could dip to the low 3,000s. At that point, we suspect all the bad news will be priced in, and we’d look to increase exposure again.

Ben Bennett

Head of Investment Strategy and Research

Ben focuses on investment ideas and themes. He spends a lot of time on the 4Ds of fixed income investing: debt, deficits, demographics and deflation. This might be more than a little influenced by his first-hand experience of a credit crisis, having joined us from Lehman Brothers in 2008.

Ben Bennett