The Triangle LivingThe Triangle Living
  • Home
  • Latest News
  • Real Estate
  • Business
  • RTP
  • Chatham Park
  • Food and Drink

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

What's Hot

Let’s Get High

May 25, 2023

Seaside Snacks

May 25, 2023

New home sales climbed more than expected in April

May 23, 2023
Facebook Twitter Instagram
Facebook Twitter YouTube Telegram
The Triangle LivingThe Triangle Living
Consult Subscribe
  • Home
  • Latest News
  • Real Estate

    New home sales climbed more than expected in April

    May 23, 2023

    Examining how Raleigh’s proposed budget will impact transportation, housing

    May 17, 2023

    New home construction rose in April after a dip in March

    May 17, 2023

    ‘We need more of it’: Construction begins on new affordable housing development in Raleigh

    May 10, 2023

    More homes sitting on market and selling under asking price, new housing data shows

    May 9, 2023
  • Business
  • RTP
  • Chatham Park
  • Food and Drink
The Triangle LivingThe Triangle Living
Home » Goldman Sachs: Bear Stock Market isn’t Over
Business

Goldman Sachs: Bear Stock Market isn’t Over

Press RoomBy Press RoomSeptember 7, 2022No Comments3 Mins Read0 Views
Facebook Twitter Telegram Tumblr Reddit WhatsApp
Share
Facebook Twitter LinkedIn Pinterest Email

The S&P 500 rose 17% from June 16 through Aug. 16. But since then, the index has dropped 9% on Fed hawkishness.

Many investors grew optimistic about stocks as the S&P 500 climbed 17% from June 16 through Aug. 16.

But since then, the index has slid 9%, as Federal Reserve officials have made it clear they won’t pivot away from interest-rate hikes any time soon. That decline has left the S&P 500 down 18% year to date.

So the question arises: was the ascent of June to August just a bear market rally, or was it the sign of a bigger rise ahead?

Goldman Sachs strategists have some interesting views on the topic. “As investors process new information and adjust expectations accordingly, it would be unusual if there were never rallies within bear markets,” they wrote in a commentary.

“But there are usually two reasons for bear market rallies:

1. “Longer-term expectations of growth improve, even if in the short term they are still pretty negative; and

2. “Investors become increasingly confident that they are approaching the peak in the interest rate cycle.”

Both of Goldman’s conditions seem to have been met this time around.

Small Change, Big Effect

“Often, given light positioning in bear markets, marginal changes in these variables can have amplified effects on markets,” the strategists said. The strategist note that bear market rallies are quite common.

“Taking the experience of the bear markets since the 1980s, including the collapse of the technology bubble in 2000-2002 and the Great Financial Crisis in 2008, we see a repeated pattern of rebounds before the market reaches a trough,” they said.

“In this context, the recent rally since June 22 is, in our view, a bear market rally. Its duration and magnitude were not unusual relative to the experience of previous decades.”

So where does that leave stocks going forward? “We expect further weakness and bumpy markets before a decisive trough is established,” the strategists said.

Selling Time

Goldman isn’t the only major financial institution that is skeptical about stocks. Amundi, Europe’s biggest money manager, is another.

“It’s time to reduce equity exposure and become more defensive,” Vincent Mortier, Amundi’s chief investment officer, wrote in a commentary cited by Bloomberg.

“While a global recession may be avoided, after the recent rally there are no elements supporting a positive stance in equity markets, while risks are increasing.”

Meanwhile, Bank of America customers are voting with their feet. Last week, they sold a net $1.9 billion of U.S. stocks, representing the third straight week of outflows, BofA said. The clients unloaded both exchange-traded funds and individual stocks.

Given the Fed’s determination to keep increasing interest rates, stocks may well fall further.

Activity in the interest-rate futures market shows traders see an 81% probability of at least another 150 basis points of tightening this year. The Fed has done 225 basis points already since March.

As for valuation, the S&P 500 forward price-earnings ratio stood at 16.7 as of Sept. 2, according to FactSet. That’s marginally below the 10-year average of 17.

But a strong bull market has prevailed over the last decade, with a 13% annualized return, according to Morningstar. So the market may still be overvalued.

TheStreet, Inc. All rights reserved. Action Alerts PLUS is a registered trademark of TheStreet, Inc.

This story was originally published September 7, 2022 1:07 PM.



Read the full article here

Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email
Previous ArticleApple iPhone Event Live Blog
Next Article 10 remote-friendly icebreaker games | Durham Herald Sun

Related Posts

Press coffee shop & cafe to open in downtown Raleigh NC

May 2, 2023

Report advises against minimum substation safety rules

May 2, 2023

Why This Year’s ‘10 Highest-Paid Athletes’ List Looks Different

May 2, 2023

Regional Banks Tumble to 52-Week Lows. Here’s the Chart View.

May 2, 2023

Why One Education Company Is Blaming AI For Its Stock Collapse

May 2, 2023

What Happened to Silicon Valley Bank? Why Is It in Trouble?

May 2, 2023
Add A Comment

Leave A Reply Cancel Reply

Top Articles

Seaside Snacks

May 25, 2023

New home sales climbed more than expected in April

May 23, 2023

Veggie Tales

May 19, 2023

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

Advertisement

Your Top Source for the latest Real Estate, Finance, Business and general news about North Carolina, Follow us to get the latest news from the most trusted sources.

We're social. Connect with us:

Facebook Twitter Instagram Pinterest YouTube
Top Insights

Top UK Stocks to Watch: Capita Shares Rise as it Unveils

January 15, 2021
8.5

Digital Euro Might Suck Away 8% of Banks’ Deposits

January 12, 2021

Oil Gains on OPEC Outlook That U.S. Growth Will Slow

January 11, 2021

Subscribe to Updates

Get the latest Real Estate, Finance news directly to your inbox.

© 2023 The Triangle Living. All rights reserved.
  • About
  • Privacy Policy
  • Terms and Conditions
  • Advertise
  • Contact

Type above and press Enter to search. Press Esc to cancel.