Beautiful Virgin Islands

Tuesday, Jun 03, 2025

Wall Street is warning investors not to try to time the bottom in stocks — with the bear market potentially dragging on into 2023

Wall Street is warning investors not to try to time the bottom in stocks — with the bear market potentially dragging on into 2023

Bullish investors have started believing the US stock markets are turning around, after a downbeat first half of the year.
Optimists such as Fundstrat's Tom Lee have argued that prices for equities have bottomed out, and say the summer rally on the major US benchmarks is a flashing sign they'll hit all-time-highs before the end of 2022.

The S&P 500 is up about 17% and the tech-heavy Nasdaq has gained over 20% over the past two months, as of early Friday. Traders have found cause for cheer in the Federal Reserve's pledge to be data-dependent on interest-rate hikes and in a lower-than-expected July inflation print, which have eased worries about recession.

But Wall Street's biggest names aren't buying it. Big bank analysts have argued that stocks' current rebound is just a classic bear market rally — when equities rise sharply but just for a short time, before resuming a long-term decline.

"Stocks are still not inexpensive, despite the bear market," Bank of America's Savita Subramanian, an equity and quant strategist, said in a recent research note.

"In fact, they are more expensive after the S&P 500's 17% rally from its June low, driven by a drop in the cost of equity."

This is not the right moment for investors to try to time the bottom, and disappointing economic data could push stocks lower, according to analysts like Subramanian and UBS' Jason Draho.

"Becoming more optimistic in the current highly uncertain environment does make the markets more vulnerable to negative news," Draho, the head of Americas asset allocations at the Swiss bank, said.

Wall Street's base case remains stocks won't stage a true revival until the Fed pivots and starts cutting interest rates. The US central bank hiked rates by 75 basis points in June and July to try to tame inflation, which is running close to a four-decade high.

Morgan Stanley's Mike Wilson has cautioned investors not to bet on a rate-hike pause any time soon. The bank's CIO noted that July's strong labor market report — which showed the US adding 528,000 jobs — would give the Fed scope to continue tightening aggressively.

"While inflation appears to be peaking, it's not likely to come off at a pace fast enough to spur the type of sustained Fed pause the equity market is already discounting," Wilson said in a recent research note.

Bank of America said this week that it expects rate hikes to continue until February 2023, with nominal interest rates hitting 4%. Meanwhile, Goldman Sachs said a Fed pause would likely only happen at the end of 2022.

While it's tempting to dive into equity markets, the consensus on Wall Street is that investors should be biding their time, rather than buying indiscriminately.

"The message from us for the next several months remains," Wilson said. "Risk/reward is unattractive, and this bear market remains incomplete."
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
×