BofA projects S&P 500 will hit 3,800 in the next 3 weeks By Investing.com

By Senad Karaahmetovic

U.S. equities are likely to continue sliding in the next few weeks as the possibility of a deeper recession in the second half of 2023 in the United States is growing, according to Bank of America strategists.

The could slide to 3,800 by March 8 after failing to clear 4,200 this week, strategists told clients in today’s note. The index fell 1.38% yesterday to close at 4,090.41, meaning that a drop to 3,800 implies a 7% downside risk.

“450bp in 11 months… most aggressive Fed tightening in decades… Fed tightening always “breaks” something (Chart 2); equity positioning light, we get it; but 2-year yields @ new highs in US/Europe, MOVE >100, Bitcoin/TSLA feverish, violent narrative flips from recession to immaculative landing to CPI acceleration shredding Fed & govt credibility,” strategists wrote in a client note.

Their forecast calls for “no landing” in the first half of the year, however, the back half of the year could then see a “hard landing” for both markets and the economy as rates remain very high.

The Fed mission is “very much unaccomplished,” strategists added.

As far as flows to a week to Wednesday are concerned, $5.5 billion went to bonds, $1B to cash and roughly $300M to equities. Treasures attracted the largest inflow in 6 weeks and have posted the best start to a year in 19 years.

On the other hand, tech stocks recorded the largest outflow since September 2022.