NEW YORK, April 1 ― US stocks have soldiered on through a banking mess to notch solid first-quarter gains. Some investors say that performance could come under pressure if a widely expected recession hits.
“The answer is emphatically no, the market is not priced for a recession at all,” said Hans Olsen, chief investment officer at Fiduciary Trust Co, which is guarding against future market turbulence by holding higher than typical amounts of cash. For stocks, “it means that we could be in for some very nasty surprises over the coming quarters.”
That’s pushed investors to take a second look at key metrics such as corporate earnings. While estimates for profits are already downbeat for the coming quarters, some believe they may fall further if there is a recession. Nathan Shetty, head of multi-asset at Nuveen, believes current valuations show investors have yet to price in a recession.
Some investors say stocks may have priced in a recession during last year’s steep decline, which saw the S&P 500 fall by as much as 25.4 per cent from its all-time high to when it reached its October nadir.