While the S&P 500 SPX has fallen about 25% from its peak this year, there’s “more pain to come” for equity-market bulls embarking on a “misguided ‘buy the dip’ strategy,” Mizuho’s team of U.S. economists warned in a Tuesday client note.
While the S&P 500 SPX has fallen about 25% from its peak this year, there’s “more pain to come” for equity-market bulls embarking on a “misguided ‘buy the dip’ strategy,” Mizuho’s team of U.S. economists warned in a Tuesday client note. But with inflation running near a 40-year high, the Federal Reserve will keep “chasing the terminal rate that causes the labor market to crack.” That means long-term rates will be “dragged higher” to achieve a sustained pullback in U.S. living costs, but also resulting in increased risk to earnings and real growth, they said.
With third-quarter earnings picking up later this week, the team pointed out that bottom-up analysts continue to call for a 8% to 10% increase in operating earnings in 2023.