Source: Zhitong Finance and Economics
Bank of America Corporation said on Thursday that a mild recession in the second half of the year would put pressure on the market, so he lowered the S & P's 2022 target to 3600 from 4500.
Bank of America Corporation said on Thursday that a mild recession in the second half of the year would put pressure on the market, so his equity team lowered its 2022 target for the S & P from 4500 to 3600. This is more than 5% lower than the current level.
However, Bank of America Corporation strategist Savita Subramanian wrote in a report that the index could fall to around 3000-3200 by the end of the year.
Bank of America Corporation's equity team predicts that there will be five quarters of negative economic growth in the United States from the first quarter of 2022 to the first quarter of 2023. Interest rate strategists predict that the 10-year Treasury yield will be 2.75% by the end of 2022.
Bank of America Corporation also cut his full-year 2022 earnings per share forecast to $218 from $221and his 2023 earnings per share forecast from $230to $200.
Bank of America Corporation said it maintained its assumption of normalizing real interest rates at 0 per cent, but warned that the S & P; was highly sensitive to interest rates: every 10 basis point change in the discount rate meant a 2 per cent change in the fair value of the S & P;
Market bottom indicator
"We have seen 11 indicators in history before the market hit bottom, one of which is a Fed rate cut, which always happens before a bull market begins," Subramanian said.
Our economists expect the Fed to cut interest rates for the first time in the third quarter of 2023. Typically, more than 70% of these indicators are triggered before the market hits bottom. Currently, only 18 per cent of the indicators have been triggered. "
Two of the indicators triggered include: the AAII survey shows more bears than bulls and a steeper yield curve.
Edit / Viola