(Bloomberg) -- So violent have the selloffs in US equities become, a Cantor Fitzgerald equities handicapper has pulled his prediction from just two weeks ago that stocks were poised for a rebound.
The S&P 500 plunged more than 4% Wednesday, headed for the biggest rout in almost two years, after consumer stalwarts from Target Corp. to Walmart Inc. reported shrinking profit margins. The index fell to 3,917, down from roughly 4,100 when Eric Johnston, head of equity derivatives and cross asset at Cantor, predicted on May 2 US stocks were poised for a short-term bounce.
“This call has proved wrong,” the analyst wrote. “It no longer makes sense to own equities.”
Johnston cited “very concerning” earnings results from the retailing giants that showed consumers are cutting back on discretionary purchases at the same time margins are under pressure from higher costs.
Wall Street strategists have been scouring charts and economic data for signs that the five-month rout in stocks is showing signs of reaching a bottom. So far, each rebound has given way to deeper losses as the S&P 500 has fallen nearly 18% in 2022 amid fears about slowing economic growth while the Federal Reserve withdraws monetary stimulus.
Johnston said many aspects of his original thesis remain intact but have been overshadowed by fundamental concerns.
“While a bounce may still happen, if it does it will be much shallower than we once thought and hence not worth playing.”
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