Firms from HSBC Holdings Plc to Credit Suisse Group AG are skeptical that the S&P 500 Index has reached its ultimate low and warning that U.S. equity prices still don’t fully reflect the risks of higher interest rates on earnings and valuations. Aggressive tightening by the Federal Reserve in an attempt to fight the hottest U.S. inflation in four decades can do further damage to corporate bottom lines and, in turn, share prices, according to HSBC.
Valuation risks for the benchmark index “will persist well into 2023, and most downside in the coming months will come from slowing profitability,” which threatens to push the S&P 500 as low as 3,200 in the fourth quarter, according to Max Kettner, HSBC’s chief multi-asset strategist. That puts the firm’s year-end target below the average of 4,346 in the last Bloomberg survey conducted in mid-September.
While the S&P 500 is on track for its best two-day surge since April 2020, even some of Wall Street’s most ardent bulls are turning to sour. JPMorgan Chase & Co.’s Marko Kolanovic, for instance, recently reversed the sanguine view he’s held throughout 2022, reiterating on Monday that hawkish central banks and the destruction of the Nord Stream pipelines will likely delay any recovery, putting the firm’s 2022 S&P 500 target of 4,800 at risk.
Morgan Stanley’s Mike Wilson, one of Wall Street’s best known stock-market pessimists, has said U.S. equities are in the final stages of a bear market. He sees an eventual low for the S&P 500 coming later this year, or early next, at around 3,000 to 3,400.
You mean there is a rally next week?
What rally are you referring to
Um.. What rally?
...because they're net short.
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