Business

BofA says hard landing to gain stock in second half


(Bloomberg) – According to strategists at Bank of America Corp., a slower economic downturn in the US will affect stocks in the second half of this year.

Most read from ​Bloomberg

A group led by Michael Hartnett is among those predicting a so-called “no landing” scenario in the first half of the year, when economic growth will remain strong and central banks are likely to maintain a hawkish stance for a longer period of time. That will likely be followed by a “hard landing” in late 2023, they wrote in a February 16 note.

Wall Street Games ‘Don’t Land’ in an Era of Stock Turmoil

Earlier this week, BofA’s global fund management survey found that most investors don’t believe the 2023 stock rally will last. Doubts have been fueled in recent days by hawkish commentary from Federal Reserve officials and US producer price and inflation reports suggesting continued upward pressure. US stocks fell and bond yields rose on Thursday.

Recent economic indicators suggest that the Fed’s mission to reduce inflation is “very incomplete,” Hartnett wrote. He predicts the S&P 500 will fall to 3,800 points on March 8 – down more than 7% from Thursday’s close – after the benchmark failed to break above the ceiling of 4,200 points.

Some strategists agree with Hartnett’s more cautious view. Morgan Stanley’s Michael Wilson this week said US stocks were ripe for a sell-off after early pricing in the Fed’s pause on rate hikes. He expects stocks to bottom out in the spring. And in a note on Friday, Barclays Plc strategists, including Emmanuel Cau, also said the stock rally is being controlled by high inflation.

According to Demand, the technical and sentiment indicators have normalized “and are now less supportive, but also not giving a clear sell signal.”

Meanwhile, strategists at Wells Fargo & Co. led by Christopher Harvey, said a 3% to 5% decline in US stocks in the near term will create an opportunity for investors to buy. Unlike Hartnett, they consider a hard landing unlikely given the economy remains resilient.

Hartnett said in a note, citing EPFR Global data, investors continued to stay away from U.S. equities in the week to February 15, with a total outflow of $2.2 billion. . Europe, on the other hand, saw inflows of $1.5 billion, while emerging market stocks attracted $100 million.

Bonds have $5.5 billion in inflows, with Treasuries having their best start to a year since 2004, Hartnett writes. Meanwhile, BofA’s individual clients poured the third largest amount of recorded money into bonds.

–With support from Sagarika Jaisinghani.

(Updated with comments from Wells Fargo strategists in the seventh paragraph.)

Most read from ​Bloomberg Businessweek

©2023 Bloomberg LP

news7f

News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button