According to Bank of America analyst Michael Hartnett, turbulence in global financial markets has not yet reached a scale that would signal a hard economic landing, Bloomberg writes.
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Even as the S&P 500 has fallen about 6% from its record high in mid-July, the benchmark index has held above its 200-day moving average of about 5,050, while the yield on the 30-year U.S. Treasury note has not fallen below 4%.
“Technical levels that could have flipped the narrative on Wall Street from a soft to a hard landing were not broken,” Hartnett wrote in a note. “Investors are jittery, but expectations of a Fed rate cut mean the preference for stocks over bonds has not been wiped out by the market’s decline,” he added.
Hartnett, who has taken a more neutral stance on stocks this year after being bearish during the 2023 rally, said the next technical levels to watch are the 200-day moving averages of the Philadelphia Stock Exchange semiconductor index and an exchange-traded fund tracking big tech companies.
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