Stocks staged a healthy rebound on Friday. But for now, the consensus on Wall Street is that the sell-off is likely to expand further as losses mount.
“The stock market appears to have embarked on another substantial bear market rally,” Morgan Stanley equity strategist Michael Wilson told clients on Sunday. “After that, we still believe prices are still headed lower.”
Wilson is known for his bearish leanings. But he’s not the only one holding the position, as concerns over rising interest rates and the possibility of a recession — which would hurt corporate earnings — hang over investors. Plus, stocks may have gotten a lot cheaper, but they’re still not cheap.
“For most investors, trying to time the market can be time-consuming and loss-making,” Mark Heifer, chief investment officer at UBS Global Wealth Management, said on Monday. “Investor sentiment is fickle and the market is likely to remain Shock until we get a clearer picture of the 3 ‘Rs’ – interest rates, recession and risk.”
Michael Hartnett, chief investment strategist at Bank of America, has been tracking the “outflow” of capital from the market. He recently told clients that a “true capitulation” is marked by investors selling “what they love,” noting that Apple, a longtime fan favorite, has recently fallen more than 20% from its recent high.
“Are we there yet? No,” he said late last week. “stock [are] prone to [an] A bear market rally is imminent, but we don’t think the final low has yet been reached. “
One exception: Goldman Sachs said it believes “the worst of the recession may be over” as long as one is avoided.
Still, it recently lowered its year-end price target for the S&P 500 “to reflect higher interest rates and slower economic growth than we had previously assumed.”
JetBlue gets hostile over Spirit acquisition
Spirit had previously rejected a takeover bid from JetBlue, preferring an earlier deal to merge with budget airline Frontier.
Now, JetBlue is appealing directly to Spirit’s shareholders, urging them to vote against the Frontier deal while launching its own all-cash offer of $30 a share, my CNN Business colleague Allison Morrow reports.
JetBlue said in a statement Monday that it offered a 60% premium to the value of the Frontier deal. The airline added that it is open to negotiating a $33-a-share deal if Spirit agrees to provide business information that JetBlue claims has been withheld.
Spirit shares rose 14% in premarket trading to above $19 a share.
A quick rewind: In February, Spirit agreed to be acquired by Frontier for cash and stock, valuing Spirit at $25.83 per share at the time.
JetBlue joined the ranks in April, but Spirit ultimately rejected its all-cash offer of $33 a share.
Spirit Chief Executive Ted Christie told analysts earlier this month that the bid cannot be taken seriously because the company does not believe regulators will eventually approve it.
“It is beyond any common sense to believe that JetBlue’s acquisition of Spirit would be approved by the U.S. Department of Justice,” Christie said, noting that the Justice Department has opposed JetBlue’s alliance with American Airlines in the northeastern United States. U.S.
Top traders say China market ‘close to bottom’
Many on Wall Street believe that U.S. stocks will continue to fall. But is China a different story?
“I do believe the market is nearing the bottom right now,” China Renaissance CEO Fan Bao told CNN Business.
“We actually thought it was a good investment opportunity,” said Bao, who sat in front of a sign in his Hong Kong office that read: “BullMarket4ever.”
He added that his Beijing-based firm, which invests in startups through several funds, has recently been able to trade at valuations that have been slashed to half of the past.
“I don’t think people need to panic,” he continued.
That said: China Renaissance, which manages $7.7 billion in assets, has slowed the pace of new investments this year.
Also today: Empire State Manufacturing Survey at 8:30am ET.
Tomorrow is coming: Economists predict that US retail sales rose 0.8% in April, a slight increase from the previous month.