On Monday, U.S. stocks launched a counter-offensive, with all three major indexes closing up. As of the close, the Dow Jones index rose 1.98% to 31880.24 points; the S&P 500 rose 1.86% to 3973.75 points; the Nasdaq rose 1.59% to 11535.27 points.

On the news side, U.S. President Joe Biden signaled that he would consider lowering tariffs on China during his first trip to Asia.

In addition, JPMorgan Chase raised its guidance and its forecast for the future economy improved, also boosting the stock market.

JPMorgan announced at its investor day event on Monday that, affected by expectations of interest rate hikes, the company’s net interest income in fiscal 2022 will reach $56 billion, a full $6 billion increase from its January guidance of $50 billion.

When it comes to macroeconomics, CEO Dimon believes that the U.S. economic “storm” may dissipate, and there may be an economic recession, but it cannot be the same as before. The current obstacles to economic growth are not unbreakable.

However, considering the previous turbulent market, it is still unknown whether this round of rebound in U.S. stocks can continue. Morgan Stanley and Bridgewater issued a warning, saying that the current market is still too optimistic and it is too early to be bullish.

Is this rally a sign that U.S. stocks have bottomed out? Or a flash in the pan? Organizations have different opinions –

The bottom has not yet arrived: US stocks are approaching a “technical bear”, but the market is not panicking

As of the close on May 23, the S&P 500 index fell 16.63% during the year, with an amplitude of 21.16%, approaching the level of a “technical bear market”, but most indicators show that the market is still “calm” and the real bottom may not yet appear.

In terms of trading volume, the trading volume of the S&P 500 Index (.SPX.US) is about 260 billion so far this year, compared with about 250 billion in the same period last year, and the trading volume has not shrunk or expanded abnormally.

Chris Murphy, co-head of derivatives strategy at Heiner International Group, believes that the decline in the stock market has not been accompanied by a surge in trading volume. Generally speaking, when the market bottoms, the trading volume increases, which is a sign of market capitulation.

In addition, the S&P 500 Volatility Index (.VIX.US) , known as the “fear gauge”, has fallen nearly 15% since May, indicating that market sentiment is now stabilizing.

The VIX index closed at 28.48 last night, after analysts said that historically, when the panic index reaches the 40-45 level, the market will fall sharply. So when the panic index reaches 45, it means the bottom has arrived.

Max Gokhman, chief investment officer of financial investment institution AlphaTrAI, said that the trend of the S&P 500 index was relatively orderly, and there were no obvious signs of panic, which indicated that the market bottom had not yet appeared. This, combined with the fact that the Fed is accelerating policy tightening to catch up with inflation and putting the turmoil in U.S. stocks behind, has led to a gloomy market outlook.

Morgan Stanley chief U.S. equity strategist Michael Wilson also said it was too early to be bullish. He pointed to the biggest areas of risk in the market right now including the ability and willingness of consumers, pressure on corporate margins, excess inventory and a cyclical downturn in tech spending.

Greg Jensen, co-chief investment officer at Bridgewater Funds, also believes that the current market is still “too optimistic” and that investors may not yet accept the normalization of an environment of higher inflation and slower growth.

Optimism: Corporate earnings are solid, recession is unlikely; valuations have also been pulled down

Some agencies think the situation is not so bad.

BlackRock, the world’s largest asset management company, said that the current stock price has largely reflected the poor macro outlook in the United States and the Fed’s hawkish stance, but the economic restart momentum is still strong, especially in the United States, so there will be no recession. .

BlackRock is also bullish on stocks in developed markets, particularly the U.S., because of the high percentage of high-quality companies with strong cash flow and financial health.

Analysts at Jefferies also believe that the market has overreacted to extreme tightening, which is fully reflected in stock valuation levels.

Wells Fargo said the number of companies above its 200-day moving average had hit its lowest level since the first half of 2020, and the extreme of the bearish sentiment was enough to trigger a “buy” signal in its analytical model. This is a “contrarian indicator” used to predict the best time to enter the stock market.

Scott Krauthamer, head of equity product management and strategy at AllianceBernstein, said that there are many factors causing the current market volatility. Instead of predicting when or how the market will recover, investors should be cautiously optimistic about the market outlook, while paying attention to four major risks and opportunities:

First, the U.S. is not expected to fall into a nominal GDP recession; second, corporate earnings are strong in the first quarter of 2022; third, multiple indicators show that the U.S. economy may have strong support; and finally, falling valuations are expected to help investors gain long-term return on investment.

In any case, this week the Federal Reserve’s FOMC will release the minutes of its May monetary policy meeting, when investors will be expected to get further prospects and details of the Fed’s interest rate hike.

In addition, more U.S. stock retailers will announce their results this week, including $ Macy’s (M.US) $ , $ $ tree company ( DLTR. US ) $ , $ US Dollar General ( DG. US ) $ , etc. Earnings will give investors a clearer picture of the state of the U.S. consumer and the resilience of corporate earnings amid persistent inflation, so please pay attention.

This article is reprinted from: https://news.futunn.com/post/15803752?src=3&report_type=market&report_id=206457&futusource=news_headline_list
This site is for inclusion only, and the copyright belongs to the original author.