Investors appear to be less than enthusiastic about the stock market's bullish outlook this year, according to Bank of America. They have pulled money out of US technology and healthcare stocks and the outflow trend of the past month is the worst since January of 2019. Investor sentiment continues to remain bearish, as 57 of the past 58 weekly surveys show bearish respondents outnumbering bullish respondents.
Michael Hartnett of BofA recommends investors pull back from the S&P 500 once it reaches the 4,100 to 4,200 range. He believes another tightening of financial conditions may be required to tip the US economy into a recession.
Meanwhile, Wells Fargo strategist Anna Han believes the rally in US stocks may be short-lived. Investors have been bidding for risk, but Han says the risk appetite is more likely to be fleeting than long-lasting. She adds that when the bar is lowered, it is hard to trip over, and this is what is helping equities rally.
The S&P 500, Nasdaq Composite and Dow Jones have all made gains so far this year, and the three indexes got a further boost Thursday as investors cheered strong GDP data and Tesla earnings. Corporates are cutting their earnings growth and feeling their margin pressures, but it's not a significant contraction. It seems investors are relieved that things are not as bad as feared.
0. “Record cash levels show investors remain unconvinced by the stock market's bullish transition in 2023, Bank of” Business Insider India, 27 Jan. 2023, https://www.businessinsider.in/stock-market/news/record-cash-levels-show-investors-remain-unconvinced-by-the-stock-markets-bullish-transition-in-2023-bank-of-america-says/articleshow/97382984.cms
1. “Record cash shows investors unconvinced by stock market's bull transition” Markets Insider, 27 Jan. 2023, https://markets.businessinsider.com/news/stocks/stock-market-forecast-bull-rally-investors-cash-holdings-unconvinced-bofa-2023-1
2. “The US stocks rally is driven by optimism that things are ‘not as bad as feared,' but this may not last, Wells Fargo strategist warns” Yahoo News, 27 Jan. 2023, https://news.yahoo.com/us-stocks-rally-driven-optimism-115905221.html
3. “Stock market outlook: US stocks rally is ‘odd' and will be fleeting” Markets Insider, 27 Jan. 2023, https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-rally-fleeting-wells-fargo-2023-1