Recession will take shine off stocks' AI-fueled rally in H2: HSBC

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US stocks face a painful rest of 2023 with a recession set to take the shine off the AI-fueled rally, HSBC says

Investors should brace for stock-market pain over the rest of the year with a long-forecast recession likely to finally hit the US economy in the fourth quarter of 2023, according to HSBC.this week that it expects the Federal Reserve's interest-rate hikes to drag growth into negative territory over the next six months, which would likely hammer stocks by chipping away at listed companies' earnings.

But that rally only just means equities have further to fall when bad news about the economy starts to dominate headlines, according to Baraton's team. "We are not massive bears, but think news about the economy could be tough to digest for a market which is pricing a 'soft landing'," the strategists added, referring to a scenario where the Fed manages to bring inflation down to its 2% target level without crushing growth.

 

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