US stocks experienced a slight rebound on Thursday after several days of losses, although they are still on track for a losing month. In Europe, the Stoxx 600 index ended a five-session losing streak and rose from a six-month low. Germany’s DAX index also saw gains after it was reported that the country’s inflation for September rose 4.3% year over year, the lowest since February 2022.
At CNBC’s annual investor summit, Delivering Alpha, several renowned analysts and fund managers expressed pessimism about the future. Bill Ackman, head of Pershing Square Capital Management, predicted that the 10-year US Treasury yield could approach 5%, while BlackRock fixed income chief Rick Rieder said that the Federal Reserve will raise rates. TCW Group CEO Katie Koch also warned of an impending recession for the US economy.
In other news, the European Union’s probe into subsidies given to electric vehicle makers in China does not only cover Chinese brands, but also includes companies like Tesla and BMW. SpaceX, owned by Elon Musk, won its first Pentagon contract for Starshield, a military-specific version of the company’s Starlink satellite internet system. Finally, hedge funds are taking advantage of the September sell-off in stocks by shorting certain stocks that are attracting the most short interest. Despite some positive developments, long-term prospects for investors remain uncertain.
Overall, while there was a slight reprieve in the markets, the sentiment among investors is that things may get worse before they get better. Pessimism is growing among retail investors, with bearishness climbing to its highest level since mid-May. The warnings of an impending recession and further rate hikes by the Federal Reserve dominate the conversation among analysts and fund managers. However, if inflation is seen to be adequately tamed, there may be potential for rates to remain unchanged and provide an opportunity for stocks to recover.