S&P 500 could retest October lows: Bank of America strategist

S&P 500 is already down more than 6.0% versus its year-to-date high but a Bank of America strategist warns the pain is not over just yet.

S&P 500 could lose another 9.0% from here

On Friday, Michael Hartnett said the equities market could sink all the way down to October lows. That suggests about a 9.0% downside from here.

Stock lows to be tested one last time in the coming months [due to] no equity capitulation and market too greedy for rate cuts – not fearful enough of a recession.

His view is in sharp contrast with the Mad Money host and famed investor Jim Cramer who recently said that bulls have got what they needed (source).

The benchmark index is trading well below the 4,000 level today.

Hartnett’s take on recent bank failures

Testifying on Capitol Hill last week, Fed Chair Powell warned that rates may have to go higher than previously anticipated to tame inflation.

Still, economists expect the FOMC to opt for a 25 basis points hike at its meeting next week now that the Silicon Valley Bank has collapsed. But BofA’s Hartnett said in his research note today:

Banking crisis are followed by tighter lending standards and lower risk appetite. We say sell the last Fed hike is the correct strategy as in inflationary `70s/`80s.

Amidst the recent bank failures, the likes of bitcoin, silver, and FAANG stocks are doing exceptionally well. Investors should read it as a signal that the crisis is over once these trades unwind, he concluded.