What is needed to resume the «bullish» rally in the stock market?

Analysts, studying trends in the global stock market, have identified two main factors necessary for a new «bullish» rally. 

Experts are confident that the market growth will not begin until the Fed stops raising the interest rate, and investors will not be confident in the expected corporate earnings amid the risks of a potential recession next year. Only with these two factors in mind, market participants will be able to comfortably survive the transition from high to low volatility.

As an example, experts cite the stock market's transition to growth of 28% in 2003 after the dotcom bubble, as well as the situation with growth of 26% in 2009 after the great financial crisis and the growth of 61% after pandemic lows in 2020.

However, at the moment, analysts are not completely sure about both factors. The fact is that the US Federal Reserve caught the market by surprise, saying that it intends to raise the interest rate by another 75 basis points in 2023 and leave it for a longer period.

As for the second factor, analysts' estimates vary here, as do expectations of whether the US economy will enter a recession or not. The average earnings per share estimate for the S&P 500 in 2023 is $210, the top estimate is $230 for the S&P 500 EPS, and the low estimate is $186.

However, during the subsequent economic recovery in 2023, corporate earnings will become more predictable, as will the monetary policy of the Federal Reserve System. In this scenario, it will already be possible to talk about the onset of a «bullish» market.