The S&P 500 index is the most widely followed benchmark on Wall Street. Retail investors, analysts, and fund managers alike use it to gauge the relative performances of their own stock portfolios because the index -- comprised of 500 of the largest U.S. companies across all industries -- represents a cross-section of the broader economy. 

In 2022, it declined by 19.4%, and even factoring in dividends, its total return level fell by 18.1% -- the index's worst performance since the 2008 global financial crisis.

Consecutive down years are quite rare

The S&P 500 in its present form was constructed in 1957. In the 65-year stretch since then, there were two periods when the index declined in consecutive years, and both were triggered by significant political and economic events. They include President Nixon's Watergate scandal from 1972 to 1974 combined with the OPEC oil embargo, and the dot-com tech bust in the early 2000s. 

The majority of the time, the index bounces back strongly after its down years, and that bodes well for investors in 2023. Excluding the two instances mentioned above, it has returned an average of 23.4% in the years immediately following a loss. If history repeats, the S&P 500 could finish 2023 at 4,718.

But of course, that's not a given. The U.S. economy is under stress at the moment, with above-average inflation, rising interest rates, and other macro headwinds pressuring households and businesses. Plus, the regional banking sector was in crisis last week before the government intervened, following the failure of SVB Financial, the parent of Silicon Valley Bank. 

But if history does repeat, here are two stocks that could be set for strong rebounds after falling steeply from their all-time highs. 

1. Tesla continues to dominate the electric vehicle market

Tesla (TSLA -2.88%) has plenty of long-term growth drivers, from artificial intelligence to robotaxis to robotics, but its continued leadership in the electric vehicle industry is what will likely support its stock price in 2023. 

Thanks to the opening of two new gigafactories (one in Berlin and one in Texas) last year, the company was able to deliver a record 1.31 million cars in 2022 -- an increase of 40% compared to 2021. Those facilities are still ramping up to maximum capacity, and when they get there, Tesla believes it could produce 2 million cars per year. Expectations suggest it could come close to that mark in 2023. 

Selling that many units would be an impressive feat given the broader economic situation, but this company has never shied away from a challenge. It recently slashed prices on some of its flagship models to spur demand, which dealt a blow to the competitors trying to build their own presences in the EV industry. Tesla has the highest gross profit margin of any EV producer, so it can trim prices without sending its bottom line into the red. 

The economic turmoil isn't affecting the company's long-term goals, either. It just revealed plans to build its next gigafactory in Mexico, and EV manufacture at that site could start as soon as next year. It's part of Tesla's broader plan to have as many as 12 gigafactories with a total production capacity of 20 million cars per year in operation by 2030.

Tesla stock is trading down 57% from its all-time high, but it still trades at a price-to-earnings (P/E) ratio of 42.8, which is well above the 17.8 P/E of the S&P 500 and also above the 25.1 P/E of the Nasdaq-100 technology index. But Tesla has a history of trading at a juicy premium because of its consistently high growth rates and its diverse pipeline of innovative technologies. 

If history repeats for the S&P 500 in 2023, expect investors to take advantage of the discount on Tesla stock to buy in for the long term. 

2. Meta Platforms might soon have the wind at its back

Meta Platforms (META -5.76%) stock has been under intense pressure over the last 18 months, suffering a peak-to-trough loss of 77% at its low point of $88.09 a share. It has since rebounded to the neighborhood of $190, though it remains about 50% below its all-time high. 

The social media giant has suffered from a series of internal and external challenges. The digital advertising market has been punished due to broad economic weakness, and a formidable competitor has emerged in ByteDance's TikTok platform, which is luring ad dollars away from Meta's Facebook and Instagram social media apps. 

Meanwhile, Meta is focused on building out its version of the metaverse, an idea it spent $13.7 billion on in 2022, despite the fact that meaningful revenue from these efforts is, at best, years away. Investors called upon the company to slash costs and switch its focus back to its core family of apps, particularly its Reels feature, which is designed to compete with TikTok, after its revenue and earnings continued to sink. 

Meta answered the cost-cutting call by laying off 11,000 employees in November, and this week announced that another 10,000 layoffs are coming and that 5,000 open positions won't be filled.

On a separate note, elevated U.S. inflation has declined steadily for seven months, which could provide the economy with some welcome relief. For Meta, the combination of a more cost-efficient organization and an economic recovery could significantly boost business in 2023, and there were signs of that in 2022's fourth quarter.

The company earned $8.59 per share in 2022, so its stock trades at a P/E ratio of 21. That's still 16% cheaper than the Nasdaq-100, even after Meta's stock price doubled from its recent low point. If the broader market stages a recovery this year -- as history suggests is likely -- look for Meta Platforms stock to head higher.