Wall Street is afraid to buy the dip this time around.
Even amid this latest leg of the stock market selloff, equities still aren’t fully reflecting the risks facing corporate earnings, according to strategists at Morgan Stanley, Goldman Sachs Group Inc. and BlackRock Investment Institute. Weaker consumer demand and aggressive tightening by the Federal Reserve in an attempt to fight the hottest US inflation in four decades can do further damage to corporate bottom lines and, in turn, share prices.
“We’re not buying the stock dip because valuations haven’t really improved, there’s a risk of Fed overtightening, and profit margin pressures are mounting,” BlackRock strategists, led by Wei Li, wrote in a note to clients Monday.
