Stocks won't be hit as badly by weakening corporate earnings in 2023 as many think, BlackRock strategist says

• Stocks won't be hit as badly by weak corporate earnings in 2023 as some think, according to BlackRock's Kate Moore.
• Moore noted that while recession fears are high, firms are preparing for a recession, which could buffer the market from losses.

Stocks won't be hit as badly by weakening corporate earnings in 2023 as many think, according to BlackRock strategist Kate Moore.

In an interview with Bloomberg TV on Friday, she expressed caution in the short term due to large amounts of uncertainty clouding the market but is more optimistic on equities in the medium term.

"There's a decent probability that the super bearish economic and earnings calls for 2023 are not going to prove right. In fact, there's a chance things are more resilient, and we'll find some interesting buying opportunities in the first quarter," Moore said.

Still, she acknowledged that a US recession is widely expected among Wall Street analysts and corporate CEOs.

But that also means firms are now preparing for a recession, which could buffer the market from the worst of losses, Moore said.

"I do think companies are really going to work extremely hard at defending their bottom line, in the cost cutting, managing higher input costs, managing slower demand, and perhaps slightly slower revenue growth," she said. "And I don't think earnings are going to be catastrophic next year."

Elsewhere on Wall Street, predictions have been less upbeat. Morgan Stanley's chief stock strategist Mike Wilson warned that corporate earnings estimates were still at least 20% too high for 2023.

Meanwhile, Bank of America, Morgan Stanley, and Deutsche bank have warned of a 20% fall in stocks, as still persistent inflation and high interest rates continue to weigh on the market.

Investors are pricing in a 50-basis-point rate hike from the Fed next week, but markets are still unsure how far the central bank will raise rates, or how sticky inflation will be on the downtrend.