5 charts showing that the stock market rally will fall apart in 2022: UBS

  • Stocks have seen a strong rally in the past two months after hitting a short-lived low in mid-June.
  • But according to global strategists at UBS, the rally is destined to falter later in the year.
  • Here are five charts from UBS that show long-term concerns.

Stocks have seen an impressive rally over the past two months, but investors should think twice before heading out, according to UBS.

While the company acknowledged that there are several reasons to believe the short-term trajectory for stocks is higher, there is also a compelling case against buying stocks, UBS strategy chief Bhanu Baweja and 11 other global macro strategists wrote in a note dated Aug. 15.

The strategists believe this stock rally will weaken later in the year as investors realize the Federal Reserve will have to remain hawkish, even in light of weak economic growth.

“As we get to the end of the third quarter/beginning of the fourth quarter, the market will again face a Fed underpriced for ’23 and uninspiring, if not recessive, growth,” Baweja wrote. in the note. “These forces will renew the stock’s decline in our view.”

Baweja is not the only one at UBS who is pessimistic. Nadia Lovell, a senior US equity strategist at UBS Global Wealth Management, recently told Insider that this market rally is not sustainable and that the official S&P 500 price target of 3,900 is one of the lowest on the street.

Below are five charts that show why UBS’s global strategists are cautious about equities in the medium term, even though there may be some more strength in this market rally in the near term.

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