Wall Street strategists are warning investors the market has not bottomed yet – despite stocks rallying over the past month
Wall Street warning: stocks are far from the bottom. Source: pexels.com
Although US stocks have rallied in recent months, Wall Street strategists warned investors should not try timing the market, with further volatility ahead for the rest of the year. According to Business InsiderBusiness Insider, the bear market could drag on until the Federal Reserve stops hiking interest rates.
The S&P 500 is up about 17% whereas Nasdaq has gained over 20% over the past two months. Thus, optimistic investors have argued that prices for equities have bottomed out. Moreover, Fed’s pledge to be data-dependent on interest-rate hikes and the lower-than-expected July inflation level have eased worries about recession.
However, major bank analysts believe that stocks’ current rebound is just a classic bear market rally — when equities rise sharply for a short time, just to resume a long-term decline.
Besides, Morgan Stanley’s CIO Mike Wilson has cautioned investors not to bet on a rate-hike pause any time soon. In his opinion, July’s strong labor market report would give the Fed scope to continue tightening aggressively. Bank of America also expects rate hikes to continue until February 2023, with nominal interest rates hitting 4%.
Finally, current economic and geopolitical uncertainty makes markets very sensitive to negative events. Thus, any disappointing economic data could push stocks lower, believes Subramanian and UBS’ expert Jason Draho.
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