London Daily

Focus on the big picture.
Monday, Sep 01, 2025

Wall Street is warning investors not to try to time the bottom in stocks — with the bear market potentially dragging on into 2023

Wall Street is warning investors not to try to time the bottom in stocks — with the bear market potentially dragging on into 2023

Bullish investors have started believing the US stock markets are turning around, after a downbeat first half of the year.
Optimists such as Fundstrat's Tom Lee have argued that prices for equities have bottomed out, and say the summer rally on the major US benchmarks is a flashing sign they'll hit all-time-highs before the end of 2022.

The S&P 500 is up about 17% and the tech-heavy Nasdaq has gained over 20% over the past two months, as of early Friday. Traders have found cause for cheer in the Federal Reserve's pledge to be data-dependent on interest-rate hikes and in a lower-than-expected July inflation print, which have eased worries about recession.

But Wall Street's biggest names aren't buying it. Big bank analysts have argued that stocks' current rebound is just a classic bear market rally — when equities rise sharply but just for a short time, before resuming a long-term decline.

"Stocks are still not inexpensive, despite the bear market," Bank of America's Savita Subramanian, an equity and quant strategist, said in a recent research note.

"In fact, they are more expensive after the S&P 500's 17% rally from its June low, driven by a drop in the cost of equity."

This is not the right moment for investors to try to time the bottom, and disappointing economic data could push stocks lower, according to analysts like Subramanian and UBS' Jason Draho.

"Becoming more optimistic in the current highly uncertain environment does make the markets more vulnerable to negative news," Draho, the head of Americas asset allocations at the Swiss bank, said.

Wall Street's base case remains stocks won't stage a true revival until the Fed pivots and starts cutting interest rates. The US central bank hiked rates by 75 basis points in June and July to try to tame inflation, which is running close to a four-decade high.

Morgan Stanley's Mike Wilson has cautioned investors not to bet on a rate-hike pause any time soon. The bank's CIO noted that July's strong labor market report — which showed the US adding 528,000 jobs — would give the Fed scope to continue tightening aggressively.

"While inflation appears to be peaking, it's not likely to come off at a pace fast enough to spur the type of sustained Fed pause the equity market is already discounting," Wilson said in a recent research note.

Bank of America said this week that it expects rate hikes to continue until February 2023, with nominal interest rates hitting 4%. Meanwhile, Goldman Sachs said a Fed pause would likely only happen at the end of 2022.

While it's tempting to dive into equity markets, the consensus on Wall Street is that investors should be biding their time, rather than buying indiscriminately.

"The message from us for the next several months remains," Wilson said. "Risk/reward is unattractive, and this bear market remains incomplete."
Newsletter

Related Articles

0:00
0:00
Close
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
×