Bear-market trap, or market bottom formed? -- a debate on Wall Street

Analysts Notebook wrote a column · Apr 1, 2022 16:45

Over the current state of the stock market, whether the rally of the past two weeks might just be a bear-market trap, or whether the recent selloff has formed a low, becomes a hot debate among strategists on Wall Street.

On one hand, the strategists believe the recent surge is a bear-market rally, for deeper losses. Tech stocks are among the best-performing over the past month. Noticed that tech stocks are sensitive to interest-rate moves, because higher yields tend to reduce the present value of future earnings streams, and inflationary pressures undercut corporate earnings.

The worsening macro backdrop and market-unfriendly Fed make sustained U.S. equity gains unlikely.
--- BofA strategists Gonzalo Asis and Riddhi Prasad.

On the other hand, some strategists believe a rally brings optimism to create more upside ahead for stocks, though the S&P 500 closed out its worst quarter even with a nearly 5% gain Thursday since Mar. 2020.

Bear-market trap, or market bottom formed? -- a debate on Wall Street

Investors don't typically have to worry about the Fed's first rate hike, while we do have runway, and economic momentum was good coming into this rate-hiking cycle.
--- UBS Asset Management's Jeremy Zirin.

Anyways, the number of mixed signals on Wall Street is growing...

Disclaimer: Past performance can't guarantee future results. Investing involves risk and the potential to lose principal. This article is for information and illustrative purposes only.

Source: Bloomberg

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

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