Rate hike, political uncertainty, tightening credit may gut stocks
by Wallace Witkowski
One newly minted stock bear from a major bank just got a little more bearish, saying a handful of forces including a summer Federal Reserve rate increase could send the S&P 500 into a potential tailspin this summer.
In recent interview, Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch, doubled down on a newfound bearishness, backing up an end-of-year price target for the S&P 500 index SPX, +0.11% of 2,000 with a warning that the index could drop by as much as 15% this summer. Subramanian, by the way, started 2016 with an end-of-year price target of 2,200.
At current levels, a 15% drop would bring the S&P 500 down to 1,780, a level not seen in nearly 16 months.