Investors expect bear market recovery in 2023, foresee recession ahead: Survey

A significant majority of Wall Street investors are not finding comfort in the 2023 stock market gains, as they express concerns about the potential for further market declines amid growing recessionary risks, according to the latest CNBC Delivering Alpha investor survey.

The survey, conducted this week and polling approximately 300 chief investment officers, equity strategists, portfolio managers, and CNBC contributors, delved into their sentiments about the market for the remainder of 2023 and beyond.

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Over 60% of respondents view this year's stock market gains as merely a bear market rebound, suggesting a bumpy road ahead. In contrast, 39% of investors believe that we are already experiencing a new bull market.

The S&P 500 has experienced a more than 5% decline this month alone, erasing some of its 2023 gains, which had reached 11%. This downturn is attributed to factors such as the Federal Reserve signaling a prolonged period of higher interest rates, resulting in elevated bond yields. Additionally, the market has grappled with a surge in crude oil prices and a 10-week winning streak for the dollar.

Regarding the likelihood of a recession, 41% of survey participants anticipate one in the middle of 2024, while 23% believe a downturn will arrive later than 12 months from now. Only 14% of respondents do not foresee a recession.

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Ares Management CEO Michael Arougheti, in an interview with CNBC's Leslie Picker, remarked, "I think the market is telling us we should expect another hike or two, and the consensus is building higher for longer."

While the Federal Reserve maintained its current interest rates this month, it signaled one more hike before year-end. Jeffrey Gundlach, CEO of DoubleLine Capital, suggested that the likelihood of more rate hikes has increased due to the recent surge in oil prices, potentially fueling inflation. Jamie Dimon, CEO of JPMorgan Chase, also cautioned that interest rates could rise significantly further.