Things are going to get worse before they get better.
The fed ain't gonna stop raising rates until it breaks the current expectations of workers/consumers about inflation/wage growth.
It's impossible to accurately predict timing on these things exactly, but if I had to guess...
My guess is the first half of this year we'll see unemployment rise significantly, and wage growth slow. Workers will suffer, but inflation will start to improve. The stock market will be bueyed by a downturn in the real market maybe summertime or fall. The end of this year, maybe beginning of the next, the fed will pause on rate hikes at roughly five percent, maybe more, and hold it there for a while. When they do eventually cut, it won't be down to the historical low pre -COVID rates.
For now, I've been shifting to overweight international over domestic and value over growth. There's more opportunity overseas than there has been in quite a while, because the US just dominated everything. And with rates remaining high, growth companies aren't quite sure what to do. Free money's been baked in their business model for so long.
I think the overall stock market will do really well by the end of this year, because it's forward looking by a good six months or so. Bad news in the real market will be seen as good news for the stock market, because it signals a pivot towards a new normal and a less aggressive fed. Like... It's still likely we have a recession the first half of this year, but it's some destruction that's necessary and overdue.
People say that the stock market has nothing to do with the economy and everything to do with how the rich are doing.
But the rich are part of the economy, and it is the rich who typically get rich by taking on bigger risks, being entrepreneurial, hiring many people. The stock market does affect more than just the rich.
Layoffs can be profitable if those who are laid off aren't assets. Many of the companies laying off workers are tech companies that did excessive hiring when they could borrow money for nothing and take losses during their own expansion with nothing other than the expectation of future growth.
It's not that the stock market and the real market have nothing to do with one another. Right now, it's actually worse than that. Good news in the real market is bad news for stocks, and bad news in the real market is good news for stocks in several areas, because of what effects either direction might have on inflation/rates/expectations/etc. So in the short term, they're inverted. In more stable times, they're correlated and tend to move more or less in tandem.