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The summer party on the American stock market is about to enter a hangover world since February, warn analysts of the central bank Morgan Stanley A note to its customers
The investment bank points out that market leaders have been absent this season and consider it a worrying sign of "fatigue" and that the rally reached its peak, according to Bloomberg.
Netflix and Facebook Disappointments
Despite the fact that over 85% of S & P 500 index members have met analysts' expectations during the performance season, several giants, including Netflix and Facebook, had to post disappointing results. He urges Morgan Stanley to wait until the recent decline, which began Thursday and continues Friday and Monday, is only the beginning of a further slowdown.
The S & P 500 represents a wide range of US industries, including Apple, Microsoft, Alphabet, Amazon and Facebook on the list
– We must admit that the market has given some misleading signals in recent weeks limiting the scale of broad indices when Netflix and Facebook failed. We believe that this has simply led to an even greater false sense of security in the market, according to analysts, led by broker Mike Wilson.
Investor believes that the stock market crash is the beginning of a major correction
The risk after the July rally increases as well, says the big bank.
– Sales have just begun, and this correction will be the largest we've seen since February. It is likely that it will have a bigger negative impact on the average portfolio, as it is focused on technology, consumption and small businesses, analysts write further.
A correction is characterized by a total decrease of more than 10%. 19659013] Nordea Strategist: Overreaction
Leif-Rune Rein's leadership strategy in Nordea Markets believes that Morgan Stanley's analysts are likely to collide when they warn of an upcoming correction.
Rein accepts not to have read the note together, but says that he doubts the conclusion.
– Technology companies have not been disappointed, perhaps with the growth of users. Then there may be some who are overweight in these companies, but that 's because IT has done its best this year and in recent years, especially the big FANG shares. When you find some disappointments that go on the growth of users, you get a massive selling pressure that people will take off. But that really sounds like an overreaction, says Rein.
FANG is a widely used acronym for technology shares Facebook, Apple, Netflix and the owner of Google, Alphabet. Sometimes Amazon is also included in this group, so the shortening will be FAULT.
– You can clearly get a computer-based liquidation that is undergoing a downward adjustment of overweight, but it will be a natural correction of sales. Unless it is resumed again in any of the other sectors
Another call will come up if Apple, to assume, would disappoint a lot when it loses its result after Wall Closes Street Tuesday night. [19659012] – If you get a disappointment from Apple tonight, who is the world, or at least the biggest company in the technology index, then it is clear that you will have a boost, explains Rein.
– Then the timing of Morgan Stanley Bon.
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