That was the humbug assessment from Citigroup’s global asset allocation team, who predicted Wall Street is unlikely to see a late-year bounce because 2022’s performance hasn’t been good enough thus far.
“Given that a Fed pivot is for now out of the question, the focus for remaining bulls is slowly shifting to whether the midterms and improved seasonals in Nov/Dec can improve the equity outlook. We doubt it,” said a team led by strategist Dirk Willer, in a note to clients that published on Friday. A recent move down through 3,900 for the index has some strategists concerned the index could take out its June low of 3,666.77, as investors face a wall of worry that includes high inflation, economic gloom and fears of an escalating war in Europe that has already triggered an energy crisis for the region.
Willer and the team say markets are up against a likely recession in the U.S., with the Fed having all but promised that will happen, with possible overtightening by the central bank likely to bring that to fruition.