Alliance Bernstein remains bearish on the market outlook as the U.S. economy faces a high inflationary environment headwind and a hawkish Federal Reserve that does not appear to be taking its foot off the gas anytime soon.
The global asset management firm highlighted in an investor note that Tuesday’s hotter than anticipated CPI report will force the Fed’s tightening hand to hold on longer which in turn will negatively affect market conditions.
The note stated: “Powell's speech at Jackson Hole and the most recent CPI print likely indicate that a Fed pivot is off the table anytime soon, making markets more vulnerable to rate hikes and growth concerns.”
“We believe this bear market has more room to run because most major global synchronized sell-offs (most recently the Tech Bubble Aftermath, GFC, COVID) have ended with a moderate inflation/low growth regime, and we are not there yet.”
At the moment markets look somewhat stable after the major sell-off it experienced the day before. Early on and Dow futures (INDU), S&P futures (SPX), and Nasdaq futures (ND:IND) sit near flat as more inflation data is set to hit the market shortly.
The high CPI print that Wall Street received also has Nomura suggesting for a 100-basis point rate hike in September and a higher terminal rate.