He believes the index will not recover until it reaches 3,000, which is 20% below Monday’s close.
According to hedge-fund veteran Leon Cooperman, who predicts the US economy will enter a recession in 2023, US stocks have a long way to fall.
Cooperman told CNBC on Tuesday that he expected the S&P 500 to drop 40% as a recession hit corporate profits. He predicted that stocks would not return to a bull market anytime soon.
In order to tame rampant inflation, the Federal Reserve has embarked on what is likely to be one of the fastest interest-rate-hiking cycles in its history, prompting investors to sell stocks in 2022.
As of Monday’s close, the S&P 500, the US benchmark stock index, had fallen 21% this year. This has brought it down from a high of just under 4,800 at the beginning of January to 3,761 as of Monday’s close.
Cooperman told CNBC that he expected the S&P 500 to fall 40% from its January peak. He predicted that it would fall to 3,000 before beginning to recover — 20% below Monday’s closing level.
The investor predicted the US would fall into a recession next year, either as a result of surging oil prices or because of the Fed’s interest-rate hikes.
“My basic viewpoint is the 4,800 of the S&P is likely to be the high for quite some time,” Cooperman said on CNBC’s “Squawk Box.” “I think we’re going to go through a prolonged period of low returns as we try to right the ship.”
Cooperman founded the hedge fund Omega Advisors, which he now runs as a family office. Forbes estimates he has a net worth of $2.5 billion.
Cooperman claimed that the market was losing a lot of its speculative froth. He used the crypto exchange Coinbase as an example, which is down about 86 percent from its peak.
“I believe we went through one of the most speculative periods I’m aware of, with SPACs and all that kind of nonsense going on, crypto and nonfungible tokens and stuff like that,” Cooperman said.