Bank of America analysts said the stock market has a lot in common with the run-up to recent collapses in 2000 and 2008 and faces further losses this year.
Until the Federal Reserve "reintroduces fear" by signaling that interest rates need to hit 6% to break sticky inflation and unemployment exceeds 4% signaling a recession, stocks can remain elevated, and credit spreads can remain low, Hartnett wrote.
In the meantime, investors are likely to chase the market higher "from momentum to contrarian plays, from deflation to inflation assets, from DM to EM stocks, from no landing plays to hard landing play."The gloomy forecast comes after a brutal year for the stock market, its worst since the 2008 financial crisis. All three indexes tumbled in 2022, snapping a three-year win streak. The Dow Jones Industrial Average ended the year down 8.8%, the best of the three. The S&P 500 sank 19.
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