Recession Outlook 2023: BofA Expects Downturn in Q1, Stock Strategies

Prediction  

"Following the Fed's recent 50bps rate hike, our BofA economists remain cautious on the US economy, and continue to expect a mild recession starting in 1Q23 with negative US GDP for 2023," the note said. 

While BofA posits stocks have a material downside of 36% next year, analysts highlighted three market areas still worth considering.

"Our BofA strategists prefer quality, income, and small caps to growth stocks going into 2023," the note said. Analysts also added that this outlook remains "cautious for our Internet coverage group," which includes companies like Amazon, Alphabet, Meta, EBay and Expedia.