Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Analysis: Latest U.S. stocks bounce tests skepticism that rally can last

Economy Jun 29, 2022 03:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 27, 2022. REUTERS/Brendan McDermid

By Lewis Krauskopf

NEW YORK (Reuters) - Investors are assessing a recent U.S. stock market bounce after similar rallies have fizzled in 2022, a year that is on track for the biggest S&P 500 percentage drop in the first half of a year in over a half century.

Although the S&P 500 jumped 6.4% last week, it’s hard to blame investors for being skeptical: the benchmark index has seen three other such rebounds of at least 6% already this year, only for it to then fall below its prior low point.

Already, the rally has eroded as weak consumer confidence data contributed to a 2% decline for the S&P 500 on Tuesday. The index earlier this month confirmed the common definition of a bear market by closing down over 20% from its January record peak, and remains down about that much for the year.

“It’s on the bulls to prove that it’s not just a bear market bounce,” said Willie Delwiche, an investment strategist at market research firm All Star Charts, noting that even in last week's index rise, more stocks made 52-week lows than highs on the New York Stock Exchange and Nasdaq.

Many believe stocks are ripe for a snapback after this year’s brutal declines, even if it may be short-lived.

Morgan Stanley (NYSE:MS) strategist Michael Wilson said earlier this week that the rally could extend as much as 7% from recent levels, but described any near-term gains as "nothing more than a bear market bounce."

He sees fair value price levels for the S&P 500, which closed at 3,821.55 on Tuesday, at 3,400-3,500, while a recession would bring "tactical price lows" to about 3,000.

"The bear market is likely not over although it may feel like it over the next few weeks as markets take the lower rates as a sign the Fed can orchestrate a soft landing and prevent a meaningful revision to earnings forecasts," Wilson wrote in a note.

Similarly, Jonathan Krinsky, chief market technician at BTIG, said he expects the S&P 500's "countertrend rally" to rise toward the 4,000-4,100 level into the end of the quarter, "before resuming lower in the third quarter and eventually breaking below 3,500."

GRAPHIC: S&P 500 in 2022 (

Some investors are getting more upbeat about equities.

Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire, said he has been adding equity exposure to his clients' portfolios.

DeGan doubts the economy is heading into a recession within the next 18-24 months and also expects inflation to moderate by the fall, noting the recent drop in prices of commodities such as copper and lumber as one factor.

“If my understanding of how the economy is unfolding is anywhere near correct, then I think we have seen the low," DeGan said. "I am putting money to work so I guess that tells you I am pretty confident.”

History suggests the next couple weeks could be strong for stocks, as the start of second-quarter earnings season nears.

The S&P 500 has produced a median return of 2.15% in the two-weeks following June 29 over the past 20 years, according to Bespoke Investment Group. That's the best such two-week return for any point of the year over that time.

"There's not much for investors to get excited about when it comes to the equity market these days, but in our search for silver linings, the calendar is one trend that is starting to work in the market's favor," Bespoke said in a note this week.

Analysis: Latest U.S. stocks bounce tests skepticism that rally can last

Related Articles

Dow futures Dip After Strong Jobs Report
Dow futures Dip After Strong Jobs Report By - Aug 07, 2022 5

By Oliver Gray - U.S. stock futures were trading lower during Sunday’s evening deals, with major benchmark averages coming off a positive week as stronger than...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
jason xx
jason xx Jun 29, 2022 5:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What lower rates?
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email