Bearish sentiment in U.S. stocks has become even more intense. On Thursday, JPMorgan chief market strategist Marko Kolanovic warned that investors need to prepare for a 20% drop in the S&P 500 index.
Kolanovic pointed out that high interest rates are creating a downward breakthrough point for U.S. stocks, and if the Federal Reserve continues to maintain this level of interest rates, it is difficult for him to imagine how the U.S. economy can avoid recession.
U.S. stocks continued their decline on Thursday, with the S&P 500 index closing down 0.13%. The cumulative decline in the past month has exceeded 5%, and it may usher in five consecutive weeks of decline on Friday.
However, Kolanovic believes that there is still a possibility of a short-term rebound in U.S. stocks, which largely depends on economic reports in the next few months. A major correction won’t happen immediately, and stocks will still rise in the single digits, but just one piece of bad news could send the S&P 500 down 20%.
Be wary of tech giants!
UBS Chief Economist Jonathan Pingle said on Thursday that if the employment report released on Friday is biased toward a hotter scenario, the market expects that the Federal Reserve is likely to put interest rate hikes back on the agenda.
Bob Michele, JPMorgan Chase’s global head of fixed income, is very wary of this assumption, pointing out that it will further push up U.S. Treasury yields and trigger a sell-off in U.S. stocks.
And the technology giants that have experienced astonishing gains this year are likely to be the companies that have suffered the hardest in this round of corrections. Kolanovic said Apple, Amazon, Meta, Alphabet, Nvidia, Tesla and Microsoft have achieved historic growth in a high interest rate environment and are therefore most vulnerable to huge losses.
Since the beginning of this year, the stock prices of these seven major companies have increased by a total of 83%, which is the main driving force for the rise of the S&P 500 Index. Kolanovic believes these seven companies will experience declines along with other industries in a recession scenario.
In view of this, Kolanovic believes that the U.S. money market and short-term Treasury bonds will be good investment directions. The current return rate of these two markets is as high as 5.5%, which is a key protection strategy that investors can choose.
(Source of article: Financial Associated Press)
Source of article: Financial Associated Press
Original title: S&P 500 fell another 20%!Xiaomoji’s chief warns: Seven technology giants may suffer huge losses
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2023-10-06 11:37:58
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