The bear market will not go over the horizon so soon, so investors should prepare for a reduction in revenue in the next quarter, according to Saira Malik, investment director of the $1.2 trillion Nuveen management company, writes Business Insider.
According to investment Malik, the benchmark S&P 500 index has not yet bottomed out and is now nearing the end of its worst first half since 1970.
“I think the bear market will not end until inflation shows sustained signs of slowing down,” Malik said.
She pointed out that the market still has a place to fall, given that American consumers continue to cut costs. The US consumer confidence index fell by 4.5 points in June, and May data on consumer spending, which was recently published, showed the first decline in spending for the whole year.
“Most likely, it was a rally in a bear market, and we do not think that the S&P has reached the bottom at the moment,” Malik said and warned that companies with weak pricing policies will continue to feel inflationary pressure in the second half of the year.
However, core inflation, which does not take into account food and gas prices, fell more than expected in May, and other indicators also show some lull. The 5-year inflation forecast remains stable at 2%, although Malik believes that the Fed is still far from taking pauses or slowing down the rate hike.
“We are concerned about the forecasts of companies for the second half of this year… I think this is just the beginning of the decline in profit estimates,” Malik said, warning investors that they need to be on their guard as economic conditions continue to change.
— Business Insider materials were used in the preparation
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