- The S&P 500 and Nasdaq 100 broke their four-week losing streak, signaling potential stabilization.
- Major bearish strategists now see a mid-year S&P 500 rally to 5,850.
- Equity fund outflows hit $33.5 billion, reflecting investor repositioning rather than pure risk aversion.
As selling pressure eases, U.S. stocks are showing early signs of resilience. The S&P 500 and Nasdaq 100 have rebounded from their recent slump, with analysts highlighting oversold conditions and extreme bearish sentiment as potential catalysts for a short-term rally.
Despite strong outflows from equity funds, money market funds also saw significant withdrawals, suggesting broader portfolio adjustments rather than outright risk aversion.
Will the S&P 500’s Relief Rally Hold or Fade into Volatility
The recent reversal in U.S. equities follows weeks of heavy selling, with the S&P 500 and Nasdaq 100 finally breaking their losing streaks. Bearish sentiment had reached extreme levels, as reflected in investor surveys and technical indicators like the RSI, which suggested oversold conditions.
Strategists who had been warning of further downside are now shifting to a more neutral stance. Barry Bannister of Stifel sees the S&P 500 reaching 5,850 by mid-year, while BCA Research’s Peter Berezin outlines bullish scenarios tied to AI productivity and potential trade policy shifts.
However, macro risks persist. Trump’s tariff policies, set for a key decision in April, could reignite market volatility. Earnings reports from FedEx and Nike have also pointed to industrial weakness and softening consumer demand, which could weigh on future stock performance.
For now, investors may look to quality stocks and defensive sectors like healthcare and utilities to navigate near-term uncertainties. While a full-fledged bull run is uncertain, the extreme bearish positioning could fuel a contrarian recovery in the short term.
While signs of a relief rally are emerging, sustained upside depends on clarity in trade policy and earnings strength. Investors should brace for continued choppiness.
“Markets can remain irrational longer than you can remain solvent.” — John Maynard Keynes
