ATVI - BofA sees volatile 2023 with the S&P potentially falling about 25% from current levels

Bank of America predicted a volatile year for Wall Street in 2023, with the S&P 500 ( SP500 ) potentially plunging about 25% from current levels in the first half, with a snapback possible later in the year.

In a note to clients on Tuesday, the firm added that this environment puts a premium on high-quality stocks, with BofA highlighting names like Kroger ( KR ) and Lowe's ( NYSE: LOW ).

"Our 2023 outlook is for a year of two halves: near-term downside risk amid a recession, earnings cuts and QT / persistent inflation driving the S&P 500 to as low as 3000, then a snap-back as uncertainty, rates volatility and earnings revisions improve," the firm said.

Looking at individual names, BofA included a screen of S&P 500 stocks in the bottom quintile by GDP beta that are ranked B+ or better by S&P Quality Rank. Some of the names that were included were the following:

Activision Blizzard ( NASDAQ: ATVI ), Valero Energy ( NYSE: VLO ), Lowe's ( LOW ), AutoZone ( AZO ), Lockheed Martin ( NYSE: LMT ), Kroger ( KR ), and the Tractor Supply Company ( TSCO ).

Year-to-date price action: ATVI +13.1% , VLO +54.4% , LOW -19.7% , AZO +17.1% , LMT +37.2% , KR +1.9% , and TSCO -8.2% .

In a separate BofA investment note, the financial institution reported that clients were net buyers of both stocks and exchange traded funds for the fourth straight week.

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