The Dow and S&P 500 will rally 9% this year, according to survey of Wall Street analysts

  • The S&P 500 could rally as much as 9% this year, according to a Reuters survey. 
  • Analysts forecasted the key index could end the year at 4,200. 
  • High interest rates and inflation could lead to a correction this month, analysts added. 

The S&P 500 and the Dow Jones Industrial Average will post full-year gains of about 9% in 2023, according to a survey of market analysts conducted by Reuters. 

42 analysts surveyed predicted the benchmark S&P 500 could end 2023 at 4,200, which is unchanged from a similar poll conducted by the news outlet in November. That level would mark a 5% increase from Tuesday’s close of 3,997. 

But 70% of analysts polled also noted that inflation and higher benchmark interest rates from the Federal Reserve could also lead to a correction for the S&P 500 within the next three months. So far this year, the index has gained 4.1% after declining nearly 20% last year. 

The survey was also bullish for the Dow, with analysts predicting a 9.2% full-year rise by the end of 2023 to 36,200. 

The strength of the labor market has sparked renewed concerns in recent weeks that the central bank could continue raising rates to cool down the economy, as a data-dependent Fed wants further proof that inflation is posting meaningful declines. The central bank last raised benchmark interest rates by 25-basis points at the beginning of February and official in the last week have signaled willingness to remain aggressive at future meetings of the rate-setting committee.  

Meanwhile, the majority of analysts noted that their forecasts were not reliant on whether or not the central bank cuts interest rates within the next 12 months, Reuters said.