The Tell Archives | Email alerts

June 19, 2019, 9:29 a.m. EDT

The stock market is near records so why are investors the most bearish since 2008 financial crisis?

The S&P 500 is within 1% of its closing record set on April 30

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    U.S. 10 Year Treasury Note (TMUBMUSD10Y)
  • X
    Dow Jones Industrial Average (DJIA)
  • X
    S&P 500 Index (SPX)

or Cancel Already have a watchlist? Log In

By Mark DeCambre, MarketWatch

Courtesy Everett Collection
Bearish rally?

The S&P 500 index stands less than 1% shy of a record but investors aren’t loving the climb, based on a recent fund manager survey from Bank of America Merrill Lynch.

The survey of 179 global managers overseeing some half trillion dollars in assets told BAML that pessimism has been driven by concerns over U.S.-led trade-war fears and anxieties of an impending recession here and elsewhere in the globe.

“[Fund manager survey] investors have not been this bearish since the Global Financial Crisis, with pessimism driven by trade war and recession concerns” wrote Michael Hartnett, chief investment strategist

Allocations to equities are at their lowest levels in history, while the month-over-month jump into cash and cash-like assets, was its biggest since August 2011. Investors also piled into U.S. Treasurys /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.65% , according to the survey.

The BAML Bull & Bear indicator dropped to 2.3 from 2.5 (see chart below, which shows growing levels of cash, a feature of BAML’s bear indicator):

The survey comes as the Federal Reserve begins its two-day policy meeting on Tuesday, with investors hoping that the central bank will indicate that it is willing to ease monetary policy in the face of headwinds coming from Sino-American trade wars and weakness brewing in the U.S. economy.

It’s worth noting that Hartnett views the survey hitting a bearish level as a potentially bullish contrarian sign for markets, with the thinking being that markets have a tendency to climb higher, absent a seismic shock, when investors are fearful.

“The tactical ‘pain trade’ is higher yields and higher stocks, particularly if the Fed cuts rates on Wednesday,” Michael Hartnett, BAML’s chief investment strategist, wrote in the research note.

Despite the bearishness, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.09% stands less than 2% from its Oct. 3 all-time closing high, the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.28% is 0.6% from its April 30 closing record, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.40% is about 2.1% short of its May 3 record, according to FactSet data as of Tuesday morning trade.

add Add to watchlist BX:TMUBMUSD10Y
BX : Tullet Prebon
+0.01 +0.65%
Volume: 0.00
Oct. 17, 2019 4:59p
US : Dow Jones Global
+23.90 +0.09%
Volume: 222.54M
Oct. 17, 2019 4:20p
+8.26 +0.28%
Volume: 1.61B
Oct. 17, 2019 4:20p
US : U.S.: Nasdaq
+32.67 +0.40%
Volume: 1.68M
Oct. 17, 2019 4:59p

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.