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Need to Know: Even this pessimistic Bank of America strategist says the bear-rally bandwagon has room to charge ahead

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A stock market which has seen five straight advances for the Dow Jones Industrial Average
DJIA,
+1.61%

still doesn’t have many believers.

After meeting clients in the U.K., Michael Hartnett, chief investment strategist at Bank of America, described most in a “short-term gain = long-term pain” kind of mode. The sell-off seems too orderly to trust that the lows have been made.

According to Hartnett, a super-spike oil view is gaining ground, that could see crude-oil reach $150. He also mentioned another risk that’s less discussed — a “house of cards” in private equity.

Hartnett certainly isn’t a long-term believer, and he set 4,200 as the point at which to fade the S&P 500
SPX,
+1.99%
.
“We fade rallies (e.g. SPX >4200), but not in rush,” he said.

For now, he writes, the bear rally bandwagon charges ahead, on the view that peaks have been made in CPI, bonds yields, the U.S. dollar and Fed hawkishness. There’s an idea, he writes, of a pivot by the Federal Reserve at the annual Jackson Hole address in late August, by which time the federal funds rate should be between 1.75% and 2% and a few months of quantitative tightening will be in the books.

Bank of America’s bull and bear indicator is an “extreme bearish” territory, and Hartnett says there are many oversold assets relative to their 200-day averages, which make them vulnerable to a tradeable bounce. Among them: the 30-year Treasury, CCC high yield bonds, Chinese and German stocks, U.S. banks and tech stocks, consumer stocks in the U.S., European Union and China, and industrials in Europe.

The buzz

There’s a host of economic data coming, as the Fed’s preferred inflation gauge, the PCE price index, is due for release, alongside personal income and consumer spending data. The advance report on trade also is due for release, and the final reading of the University of Michigan’s consumer-sentiment index is set for release after the open.

Gap
GPS,
+4.41%

fell 19% after the retailer slashed its outlook on the struggles at its Old Navy division.

Costco Wholesale
COST,
+5.65%

met earnings expectations but also flagged margin pressure. It also reiterated it won’t hike hot dog prices, though it has succumbed to lifting croissant and muffin prices.

Dell Technologies
DELL,
+1.45%

shares surged after its earnings topped expectations due to enterprise demand.

Biotechs will be on the move after a host of data was published at the American Society of Clinical Oncology annual meeting. SpringWorks Therapeutics
SWTX,
-5.63%
,
Iovance Biotherapeutics
IOVA,
+2.30%

and Mirati Therapeutics
MRTX,
+0.76%

— all major holdings of the hedge fund Perceptive Advisors, per its last 13-F — each slumped, while Adicet Bio
ACET,
-0.39%

and PMV Pharmaceuticals
PMVP,
+0.92%

gained.

The markets

U.S. stock futures
ES00,
+0.27%

NQ00,
+0.45%

pointed to a continuation of recent gains. The yield on the 10-year Treasury
TMUBMUSD10Y,
2.741%

was 2.74%.

Top tickers

Here are the most active stock-market tickers as of 6 a.m. Eastern.

Ticker

Security name

GME,
+11.54%

GameStop

TSLA,
+7.43%

Tesla

AMC,
+2.95%

AMC Entertainment

NIO,
+9.49%

Nio

AAPL,
+2.32%

Apple

NVDA,
+5.16%

Nvidia

AMZN,
+4.03%

Amazon

BABA,
+14.79%

Alibaba

TWTR,
+6.35%

Twitter

AMD,
+6.58%

Advanced Micro Devices

Random reads

The Uvalde, Texas school where 19 children and two teachers were shot dead made extensive preparations on how they would counter a gunman.

The New York Yankees and Tampa Bay Rays used their social-media accounts during Thursday’s night game to tweet out facts about gun violence instead of baseball.

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