Merchants work on the ground of the New York Inventory Trade (NYSE) in New York Metropolis, March 28, 2023.
Brendan McDermid | Reuters
Wall Road traders consider the inventory market is headed for losses after a constructive first quarter, seeing money as the perfect secure haven proper now, in response to the brand new CNBC Delivering Alpha investor survey.
We polled about 400 chief funding officers, fairness strategists, portfolio managers and CNBC contributors who handle cash about the place they stood on the markets for the second quarter and ahead. The survey was carried out over the previous week.
Practically 70% of respondents mentioned the S&P 500 might see declines forward. Thirty-five p.c of the traders consider the largest threat to the market this yr is a misstep by the Federal Reserve, whereas one other 32% mentioned persistent inflation poses probably the most urgent risk.
The market has been significantly resilient thus far even within the face of a banking disaster and steady tightening from the Fed. The S&P 500 is on observe to publish a profitable quarter, up greater than 5%, after equities staged a giant comeback with the federal government’s emergency rescue measures that helped stem the chaos within the banking trade.
“Financial issues enveloping recession fears have not vanished because the yield curve nonetheless represents a counter to the market’s climb greater,” mentioned Quincy Krosby, chief world strategist at LPL Monetary. “But when the market can proceed to edge greater despite a wall of fear that appears to climb greater with every new headline, it begs the query who’s proper, and which aspect is extra prescient.”
The Fed enacted 1 / 4 proportion level rate of interest improve final week, whereas signaling yet another fee hike coming this yr. Many traders consider the central financial institution ought to reverse course instantly as extra fee hikes will exacerbate banking issues and trigger a extreme financial slowdown. Nonetheless, Fed Chairman Jerome Powell explicitly mentioned fee cuts usually are not his base case.
DoubleLine Capital CEO Jeffrey Gundlach lately mentioned the bond market is screaming {that a} recession is imminent, and he sees the Fed beginning to decrease rates of interest “considerably” within the close to future. Mike Wilson, Morgan Stanley’s chief funding officer, mentioned this week that traders are nonetheless too optimistic about company earnings, and a extreme deterioration is about to tug shares decrease.
With an total bearish view in the marketplace, 60% of the traders mentioned money is their secure haven proper now. The current banking turmoil has pushed vital inflows into cash market funds, which noticed belongings improve to a document of $5.2 trillion as of Wednesday, in response to the Funding Firm Institute.
“Cash market yields >4% are exhausting to withstand forward of a slowdown, and the ‘choice worth’ of money retains rising,” Jared Woodard, Financial institution of America’s Funding & ETF Strategist, mentioned in a word.
Goldman Sachs’ head of asset allocation analysis Christian Mueller-Glissmann additionally set a choice for money over equities all over the world as he mentioned the banking stress triggered a pointy threat urge for food reversal.