Source: Wall Street News
Continuing Thursday’s gains, the three major U.S. stock indexes opened higher on Friday, with the Nasdaq expanding to 2%, the S&P 500 up 1.5%, and the Dow up 0.8%.
Notably, global equity funds saw their biggest inflows in 10 weeks, led by inflows into U.S. equities, as lower valuations attracted buyers after recession fears led to a sharp sell-off.
According to EPFR Global data cited by Bank of America, in the week ended May 25, there was a net inflow of about $20 billion in global stock markets, with the largest inflows into U.S. stocks. Cash led the asset class with net inflows of about $28 billion, a sign that market participants are still looking for safe-haven assets. Bond funds had a net outflow of $5.8 billion.
Global stock markets broadly rebounded this week, with U.S. and European stock indexes posting their biggest weekly gains since mid-March.
Citigroup strategists reported on Thursday that now is the time to hunt for dips in equities, particularly in Europe and emerging markets, which are trading at attractive valuations after a global rout.
However, Citigroup also downgraded its rating on U.S. stocks to neutral.
Strategists remain divided on whether the sell-off has bottomed, with institutions including Morgan Stanley and Bank of America saying more losses could lie ahead, while BlackRock downgraded developed-market stocks to neutral this week .
Goldman Sachs and Bank of America, two major Wall Street institutions, hold the same view as to when U.S. stocks will bottom, and both believe that U.S. stocks may have to fall until the Federal Reserve signals an end to monetary tightening.
JPMorgan’s chief quantitative analyst, Marko Kolanovi, still believed in a report last week that things would get better in U.S. stocks over time, but he also said it wasn’t the time to buy outright.
Bank of America strategists led by Michael Hartnett wrote in a note:
The summer rally is heating up. We will exit, but not in a hurry.
Past experience has shown that U.S. stocks will be relatively light after the summer, as investors reduce trading during the peak summer vacation period.
Finally, the strategists said assets such as U.S. 30-year Treasury bonds, Chinese and German stocks, U.S. banks and technology stocks, European industrial stocks, and U.S., European and Chinese consumer stocks are oversold relative to their 200-day moving averages The most serious, “prone to a rebound that can be bought at the bottom.”
Editor/Corrine
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