With the Federal Reserve tightening cycle underway and a downturn in China, the opponent of the 2020 recession, BlackRock is changing its stance on the stock market. On Monday, the asset manager downgraded developed market stocks to a neutral rating from overweight as central banks seek to combat rising inflation. BlackRock manages about $9.6 trillion in assets, according to the company’s first-quarter earnings release. Jean Boivin, head of the BlackRock Investment Institute, wrote: “The Federal Reserve signaled its focus on containing inflation without flagging the massive economic costs this would entail. “As long as this is the case and the market believes it, we don’t see a basis for a sustained rally in risk assets.” Meanwhile, the downturn in China “starts to match” the recession in 2020 is likely to create aftershocks in the global economy. “We think this will dampen growth in major economies and boost DM inflation at a very inopportune time when higher inflation has been and is proving more persistent,” Boivin wrote. The drop from BlackRock comes as the market attempts to recover from an ongoing sell-off, with the Dow Jones Industrial Average capping its first eight-week losing streak since 1923 and the Nasdaq Composite plunging deeper into territory. down market. While BlackRock did eventually lower US equities, Boivin said a dovish shift from the Fed could convince the asset manager to return to equities. In this environment, BlackRock also said it prefers to carry short-term government bonds and keep its weighting low on US Treasuries. “Stocks plummet to 2022 lows on concerns that strong rates will trigger slowing growth,” said Boivin. “We see a brighter picture, but this may not become apparent for many months.”