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Chris Gash for Money

We’ll soon close out a tough year for investors.

Financial assets like stocks, bonds and crypto struggled as inflation soared and the Federal Reserve continually raised interest rates in an attempt to bring down those spiraling consumer prices. The S&P 500 index is down around 19% since the beginning of the year, while the Dow Jones Industrial Average has lost around 9%. The worst losses of the major benchmarks were concentrated in the tech-heavy Nasdaq Composite, which is down more than 30% since the beginning of January.

With the economy in uncertain territory and the Fed signaling that more rate hikes are coming, markets are faced with a “very different backdrop than 2022, which was marked by resilient growth, high inflation and hawkish policy,” Andrew Sheets, chief cross-asset strategist for Morgan Stanley Research, wrote in the firm’s 2023 outlook. (Hawkish policy refers to aggressive policy, like higher interest rates, in order to control inflation.)

Here’s what market experts say to expect in the year to come.

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Potential losses in the short term

Stocks will continue their slowdown into 2023, and we could see more market lows like the ones that rattled investors this year, according to experts from JPMorgan.

“This proverbial snowball should continue to gain momentum next year as consumers and [companies] more meaningfully cut discretionary spending and capital investments,” Dubravko Lakos-Bujas, global head of equity macro research at JPMorgan, said in the firm’s 2023 markets outlook.

The silver lining? An eventual Fed pivot could push stock prices up at the end of year, Lakos-Bujas added. He expects the S&P 500 to reach 4,200 points by the end of 2023 — a bump of about 8% from today’s levels.

Experts at Morgan Stanley agree that the index could reach that level if the economy performs surprisingly well. But their main expectation is that stocks will end 2023 around 3,900 points, which is just slightly higher than today's level.

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Continued volatility

The stock market has been extremely volatile this year, with a frequency of intraday swings of more than 1% we haven’t seen since the Great Recession.

Volatility is a measure of the magnitude and frequency of price swings. The bigger and more frequent the price moves, the more volatile the market.

Those rollercoaster-like movements could stay high in the months to come amid the threat of a recession, slower interest rate hikes and an economic reopening in China, Jeffrey Kleintop, chief global investment strategist at Charles Schwab, wrote this month.

David Wagner, portfolio manager at Aptus Capital Advisors, says history shows us that markets are "a sprint lower and a marathon higher."

And with the potential for slowing global growth and a less accommodative Fed, this "marathon" may include more hills than plains, which could create constant volatility in the market, Wagner said via written commentary shared with Money.

But volatility is normal, and investors who stay calm and focus on the long-term can ride out the storm. In fact, returns actually tend to improve in the aftermath of big drops in the market.

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A comeback for fixed income

While stocks are expected to struggle next year, experts say bonds are poised for a comeback.

“Bonds — the biggest losers of 2022 — could be the biggest winners in 2023,” according to Morgan Stanley analysts. Meanwhile, experts at Vanguard now expect U.S. bonds to return between 4.1% and 5.1% per year over the next decade. A year ago, they were forecasting returns less than 2.5%.

The reason for the turnaround seems counterintuitive: 2022 was a rare year that prices for stocks and bonds fell together. That’s bad news for stocks, but it can be actually good news for some bond investors since falling bond prices mean higher yields. Bigger yields mean more income for investors.

Higher yields are a gift to investors who have long been starved of income in bonds, according to BlackRock’s 2023 markets outlook.

How to navigate the stock market in 2023

While the prospect of another tough year in the stock market can be daunting, investors should prepare to stay the course.

Financial advisors tend to recommend, if your circumstances permit, continuing to invest even when the market is not performing well. This strategy will set you up for success and ensure you don’t miss out on the recovery.

Taking the long view can also help alleviate the uneasiness that comes with an unpredictable market. As Philip Straehl, head of capital markets and asset allocation for Morningstar’s Investment Management group, recently put it, investors have reason for optimism.

“The 2022 downturn has set the stage for a much-improved long-term investing environment,” he wrote this month in a 2023 outlook.

More from Money:

The Smart Investor’s Checklist: 9 Year-End Moves to Consider Now

The Fed Signals More Rate Hikes Are Coming — Here’s What It Means for Investors

Stock Surged After Fed Says Interest Rate Hikes Could Slow — but Investors Shouldn’t Celebrate Too Early