J.P.Morgan cuts 2023 S&P 500 earnings forecast by 9%

A person enters the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City

(Reuters) – J.P.Morgan on Thursday cut its 2023 earnings forecast for S&P 500 companies, citing weaker demand and pricing power, margin compression, and limited buy-backs.

JPM strategists now estimate S&P 500 earnings per share for next year to be $205, down 9% from an earlier forecast of $225.

They also flagged that the S&P 500 index could “re-test” this year’s low of 3,491.58 in the first six months of 2023, as the U.S. Federal Reserve’s monetary policy tightening weakens fundamentals.

“This sell-off combined with disinflation, rising unemployment, and declining corporate sentiment should be enough for the Fed to start signaling a pivot, subsequently driving an asset recovery,” they said, adding that the index could claw back up to 4,200 by year-end, to reflect a near 3% upside from current levels.

(Reporting by Subhadeep Chakravarty and Siddarth S; Editing by Dhanya Ann Thoppil)