US stocks fell sharply in the first half of the year, but rebounded sharply in July. Although JPMorgan Chase “dead longs” bucked the trend, claiming that the United States would avoid recession and rebound in the second half of the year; but investment banks such as Goldman Sachs, Morgan Stanley and Bank of America All are warning investors to be cautious and pay attention to the risk of recession.
Wall Street investment banks such as Goldman Sachs and Bernstein warned once more on Thursday (4th) that the recent strong rebound in U.S. stocks may be short-lived and will not continue as macroeconomic data continues to deteriorate and corporate performance expectations are sharply lowered.
Analysts, led by Goldman Sachs strategist Cecilia Mariotti, said: “The market position may increase further in the near term, but there are no clear signs of a positive shift in macroeconomic momentum, and a brief strong rebound may actually increase the market once more. Downside risk, rather than heralding the end of the bear market.”
As investors flocked to U.S. stocks once more in recent weeks, market positions have improved from bearish levels in June, and volatility in asset allocations might drive stocks higher in the near term. However, Goldman Sachs believes that without a fundamental reversal to the upside, the technical rally is just another bear market rally, and the decline will be even faster than the rise.
Ultimately, Goldman “doesn’t believe we’ve crossed a real trough” and said “going forward is likely to be more reliant on macroeconomic data.”
Likewise, Bernstein, strategists Sarah McCarthy and Mark Diver, said in a Thursday report that the earnings-forecast-reduction cycle is just beginning as equity funds flee, ” Even though investors have stopped buying stocks in the second quarter, equity funds have yet to see a reversal of the ‘huge’ outflow of up to $200 billion in the first quarter. We expect stocks to fall once more in the near term.”
In addition, Dana D’Auria, co-chief investment officer of Envestnet, also said that the market has overestimated the possibility of the Federal Reserve (Fed) turning to a dovish stance. No bottoming.
“The rebound in stocks following the Fed’s July rate hike meeting was ‘overdone,’ with the market overestimating the possibility of the Fed turning dovish,” he said. ‘Green light’ to fight inflation.”
