The S&P 500 may have entered a technical bull market last week, but Bank of America Corp.’s Michael Hartnett says it’s not the start of a new major rally in equities.
The strategist who correctly predicted the selloff in stocks last year said in a note Friday he’s not convinced this is the start of a “brand, new shiny bull market.” The current market looks more like 2000 or 2008, with a “big rally before the big collapse,” Hartnett wrote in the bank’s weekly report on investment flows in various asset classes.
He sees the upside of as much as 150 points to the S&P 500 versus 300 points of downside between now and Labor Day on Sept. 4. The index is up 15% this year to 4,425.84.
Hartnett’s call in February that the S&P 500 would drop to 3,800 by March 8 failed to materialize after investors turned to technology companies in a defensive shift. He said bears like him have been wrong in the first half because the US economy avoided a recession and a credit crunch, and called the AI-powered tech rally an “unanticipated event.”
Until the Federal Reserve “reintroduces fear” via a higher target for interest rates and the unemployment rate exceeds 4% in a recession signal, stocks can stay higher and credit spreads can remain low, he wrote.
