How an Interest-Rate Hike Could Send S&P 500 Into Summer Tailspin

Rate hike, political uncertainty, tightening credit may gut stocks

by Wallace Witkowski
Market Watch

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.

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