24.09.2022
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Bank of America warned investors about the upcoming fall in the stock market

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According to analysts at Bank of America, despite the rebound in the US stock market from annual lows, it could fall even more, writes CNBC. The minimum of the year on the S & P500 index was set in June at 3636.9 points. “The S&P 500 is already up about 13% from its June low, but we think it’s premature to announce a market bottom and see room for further price declines,” Bank of America strategist Jared Woodard said. On August 9, at 19.05 Moscow time, the value of the S&P 500 was 4121.28.

The rally in the S&P 500 will end around the 4200 level, according to the bank. Strategists at Bank of America expect the S&P 500 to trade in the range of 3,800 to 4,200 over the next couple of months, which means it will remain at about the current level until the Fed meeting on September 21. According to analysts, in the future, the target for the fall of the index may be the mark of 3600 points or lower levels by the end of this year.

The investment bank named several reasons that will prevent the current rally from continuing. US inflation is still too high for the Fed to ease its hawkish rate hike strategy. Consumer price growth in the US reached 9.1% in June. This is a record for 41 years and higher than economists’ forecasts. Higher Fed rates tend to be a negative factor for US stock prices, and rates are likely to be raised at least for several more meetings in a row, the bank said.

Inflation in the US is going through the roof: what is it connected with and could it have been avoided Inflation, Fed, US

Bank of America warned investors about the upcoming fall in the stock market

In addition, there are also few signs of “capitulation” from investors in the stock market, which is usually a sign that stock market bottomed out and will start to rise again soon. Since the beginning of the year, equity inflows have totaled $180 billion, with another $340 billion in exchange-traded funds, according to Bank of America. So far in the second half of 2022, Bank of America customers have been net buyers, not sellers, of US stocks.

In addition, so far only about 30% of indicators have worked, which usually precede the bottom of the stock market. Among the indicators that Bank of America experts are guided by are rising unemployment in the United States, the beginning of a reduction in interest rates by the Fed, a sharp drop in forecasts for corporate profits and a decrease in the yield of 2-year US Treasury bonds. Typically, about 80% or more of these indicators are triggered before reaching the bottom of the market, analysts said.

All this suggests that the current rise in US stocks is a short-term rally in a bear market, and not the start of a new growth cycle. In the current situation, you should be careful, says Jared Woodard. “Use Rally” bearish » market to sell shares and get cash, and then switch to better assets. Suspend the reinvestment of dividends and coupons on bonds and use methods to optimize tax payments on sales income valuable papers before promising buying opportunities emerge this year,” he said.

JPMorgan advises investors to get rid of US stocks S&P500 , JP Morgan Chase , Banking & Finance , Stocks

Bank of America warned investors about the upcoming fall in the stock market

Investors and traders on the stock exchange, seeking to capitalize on a decrease in the value of assets. This strategy is applied to short positions (as opposed to “bulls”). A financial instrument used to raise capital. The main types of securities: shares (gives the owner the right of ownership), bonds (debt security) and their derivatives. More The stock market is a place where stocks, bonds, currencies and other assets are traded. The concept of the market affects not only the function of transferring securities, but also other transactions with them, such as issuance and taxation. In addition, it allows you to set fair pricing. More

Source: RBC

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