The S & P 500 should end 2023 higher than where it currently sits, according to Ned Davis Research. Challenges to equities currently putting downward pressure on the broad index should ease by the end of the next year, the firm said. The result is the S & P 500 ending 2023 at 4,300 points, a gain of about 350 points, or 9.1%, from where it ended Tuesday. "Heading into 2023, the macro headwinds are largely still in place," Ed Clissold, the firm's chief U.S. strategist, said in a note to clients. "The key difference is that by the end of next year, many cycles should have rotated once again to being friendly to risk assets." The estimate of around 4,300 is based on averages derived from both a recessionary and non-recessionary scenario. A rally would mark a sharp course change from what will likely be a losing year for the broad index, which has dropped 18% since the start of 2022, excluding reinvested dividends. There are multiple paths the index – and broader economy – could take to end 2023 at that level, Clissold said. If the economy moves into a recession, the S & P 500 would hit a low in the first half of the year before giving way to a "sharp rebound," he said. The weakened economy would prompt the Federal Reserve to stop hiking interest rates as early as the first quarter. But a recession would also lead to steeper declines in corporate earnings. If a recession does occur, Clissold said it would likely be shorter than those in recent history, as long as a financial crisis is avoided. But there is also a possibility the economy dodges a recession altogether, which would mean less volatility in the first half of the year. In that event, the low would likely have been seen in the fall of 2022, he said, and the stock market gains will be better in the first half. Earnings per share would also be modestly positive for the year. Clissold is uncertain if a March rate hike would be the start of a pause or total stop in interest rate increases. "Less clear is the path throughout the year," Clissold said, calling 2023 a "fork in the road," one way or the other.