Citi expects this week’s sell-off to be just a minor setback for the market. The bank’s strategist, Scott Chronert, believes that investors are simply rotating their money out of hot tech stocks and into safer sectors like healthcare, utilities, and real estate.
Two days of selling doesn’t signal a trend, but rather a classic textbook rotation. A five percent pullback is considered normal, according to Chronert. For a more significant correction, the market would need a stronger catalyst.
The main unknowns that could trigger a change in the market’s trajectory are Jerome Powell’s speech at Jackson Hole and upcoming retail earnings reports. Investors will closely watch these events for signs of the Federal Reserve’s intentions.
Citi remains optimistic about its big-picture outlook for the S&P 500, predicting it will reach new highs by year-end if the economy holds steady. The strategist believes that a hard fall could set up a buying opportunity rather than signal a bear market.
While this sell-off is not the start of a crash, investors are watching every event closely for signs of a change in direction.
Source: https://www.tipranks.com/news/citi-says-this-stock-market-sell-off-is-just-a-rotation-not-a-crash