While it’s not possible to infer from the direction of the share price in the third quarter, there are some new reasons to start chewing on the rising market, according to one expert.
“One oversold [reason to buy stocks]Matt Miskin, co-chief investment strategist at John Hancock Investment Management, told Yahoo Finance Live (video above). Even the more bullish strategists have become more bearish. ”
“So if there is good news like the Fed pivoting a bit, Treasury yields stopping rising, or oil prices falling, all of that could lead to a short-term rally in global equities. There is.” Miskin added.
I can understand why everyone is bearish. A number of factors converged last quarter, hurting market sentiment.
First, the Federal Reserve continued its mission to keep inflation under control by aggressively raising interest rates. The effects are spilling over into various asset markets, from the rising US dollar to his approaching 7% rise in mortgage rates.
“What they are doing today will really show up in terms of tightening the economy next year,” Miskin explained. It’s what we want to do, and the best way to do it is to cause a global recession, but the problem is, you have all these other risks reflected in the picture…and the data shows By the time it’s done, it’s actually too late.”
These reversals are starting to show up in economic data and corporate earnings. Last Thursday, the Bureau of Economic Analysis reported that US GDP fell in the first half of the year. And in early September, concerns about slowing growth took shape when FedEx (FDX) shocked the market by cutting its full-year guidance significantly.
Retailers are also showing signs of battling the economic slowdown, with North Face owner VF Corp issuing a full-year profit warning and Nike last week warning on sales and profits. Reports have also surfaced that Apple plans to cut production of his iPhone due to growth concerns, and Bank of America analyst Wamsi Mohan’s downgrade of the tech giant’s stock is a hot topic. is calling
A wider index reflects gloominess properly. Year-to-date, the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) are down 18%, 22%, and 30%, respectively.
The S&P 500’s current decline is the longest peak-to-trough since March 2009 low of 269 days, according to Compound Capital Advisors research.
At a 25.2% decline, this year’s correction is worse than the 7.6% average recession dating back to 2009.
Other strategists expect selling pressure to continue as risk factors rise.
“Rising interest rates, slowing growth and rising unemployment will keep households selling stocks,” Goldman Sachs strategist David Kostin warned. “With strong buybacks and weak issuance, corporates will become the largest source of demand for equities.”
Brian Sotzi general editor, Yahoo Finance anchorFollow Sozzi on Twitter @BrianSozzi and LinkedIn.
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