Fed’s Evans backs ‘front-loaded’ rate hikes, then measured pace

By Dan Burns

May 17 (Reuters) – Chicago Federal Reserve Bank President Charles Evans on Tuesday said he supports an initial burst of monetary policy tightening, and then a more “measured” pace of rate hikes to allow time to assess inflation and the impact of higher borrowing costs on the job market.

“I think front-loading is important to speed up the necessary tightening of financial conditions, as well as for demonstrating our commitment to restrain inflation, thus helping to keep inflationary expectations in check,” Evans said in remarks prepared for delivery to Money Marketeers of New York University.

Inflation, running at more than three times the Fed’s 2% target, is “much too high,” Evans said, and the Fed should raise its policy rate “expeditiously” to a neutral range of about 2.25%-2.5%.

Fed policymakers have begun doing so. They raised rates by a bigger-than-usual half-of-a-percentage point earlier this month, to a range of 0.75%-1%, and Fed Chair Jerome Powell signaled at least two more such rate hikes to come. The Fed also plans to start trimming its $9 trillion balance sheet next month.

But Evans’ preference for transitioning to a more “measured pace” – a phrase that in the past has meant quarter-point rate hikes — sounded a bit more dovish than Fed Chair Jerome Powell, who spoke earlier in the day.

The central bank, Powell told the Wall Street Journal on Tuesday, will keep “pushing” on rate hikes until it sees inflation move down in a “clear and convincing way” and will not hesitate to move more aggressively it that does not happen. nL2N2X9228

Evans said that slowing the pace of rate hikes after an initial front-loading would give the Fed time to check if supply chain kinks ease, and to evaluate inflation dynamics and the impact of higher borrowing costs on what called a “downright tight” labor market.

Unemployment is at 3.6% and job openings are at a record high.

“If we need to, we will be well positioned to respond more aggressively if inflation conditions do not improve sufficiently or, alternatively, to scale back planned adjustments if economic conditions soften in a way that threatens our employment mandate,” Evans said.

With inflation pressures as broad and strong as they are, he said, interest rates may need to rise “somewhat” above neutral to bring down inflation.

Traders are betting on that, with prices in futures contracts tied to the Fed’s policy rate reflecting expectations for an end-of-year policy rate range of 2.75%-3%.

But in Evans’ view that doesn’t mean the Fed will end up triggering a recession, as critics including several former U.S. central bankers have recently warned. nL2N2WX21P

“Given the current strength in aggregate demand, strong demand for workers, and the supply-side improvements that I expect to be coming, I believe a modestly restrictive stance will still be consistent with a growing economy,” Evans said.

(Writing by Ann Saphir; Editing by Sandra Maler)

((Ann.saphir@thomsonreuters.com))

Consumer stocks diverge as Walmart disappoints, citing inflation

May 17 (Reuters) – Shares in consumer discretionary and staples stocks were trading in opposite directions on Tuesday as encouraging retail sales data was countered by disappointing earnings and financial targets from Walmart (WMT), which blamed high inflation.

Walmart shares closed down 11.4% after it reported a 25% quarterly earnings decline and cut its full-year profit outlook due to rising fuel and labor costs, while shoppers, squeezed by decades-high inflation on basic needs like food, reined in purchases of nonessential items.

That put Walmart shares on track for its biggest daily percentage drop since an 11.79% tumble on Oct 16, 1987, the last trading session before the “Black Monday” stock market crash in which the Dow Jones Industrial Average plunged more than 22%.

Dragged by Walmart, shares in Target Corp. (TGT) finished down over 1% ahead of its earnings report due Wednesday morning. Dollar General (DG) and Dollar Tree (DLTR) both fell 3%.

But while the S&P 500 consumer staples sector declined 1%, the benchmark’s consumer discretionary sector gained 2.7% as some clothing, travel and automaker shares gained ground.

Data showed US retail sales rose strongly in April as consumers spent more on motor vehicles due to supply improvements. They also spent more at restaurants, boosting the economy at the start of this quarter.

The contrast, according to some strategists, is because soaring inflation has a bigger impact on lower-income customers who shop at Walmart or dollar stores than consumers who can still buy pricier items from companies including Under Armour (UAA), up 4%, Ralph Lauren (RL), up 3.8% and PVH Corp. (PVH) up 3.4%.

Since price increases resulting from the war between Russia and Ukraine were in purchases “the consumer cannot do without” such as food and energy, Eric Theoret, global macro strategist at Manulife said, the lower-income consumers are seeing “real income shock.”

“In terms of ability to spend, the lower-end consumer is also much closer to having exhausted their pandemic savings. With respect to earnings, we are seeing solid wage gains at the lower quintiles but even these are unable to keep pace with inflation – eroding consumers’ ability to spend,” Theoret said.

This trend was also in evidence in shares of packaged food companies such as Kraft Heinz (KHC), down 2% and General Mills (GIS), down 0.7%, after Walmart said shoppers switched to cheaper store-branded goods from well known labels.

Still, while some wealthier consumers are also looking for grocery store savings, the retail sales data showed that people still have money to spend, noted Lindsey Bell, chief markets and money strategist at Ally.

“The consumer is still spending. The consumer isn’t dead … The consumer is really interested in spending their money on services and experiences,” said Bell, noting that it might be part of the reason clothing store shares were rising.

“Going out, taking part in different activities requires you dress the part,” she said.

Also, so far in 2022, the staples sector has outperformed, showing a 1% year-to-date decline compared with a plunge of about 25.9% in consumer discretionary stocks.

“Investors are starting to realize they left consumer discretionary sector stocks in general for dead with a big exit from the discretionary sector and into staples,” said Bell.

Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, noted that even though consumers are very fearful right now, “they are in really good shape.”

“Almost every fear we have is really tied to one fear – inflation,” said Paulsen. But he believes inflation may be stabilizing, which would mean investors and consumers can also stop worrying about things like rising bond yields, Federal Reserve rate hikes or an imminent recession.

“If inflation is rolling over it’s going to lift consumer confidence. I think it’s going to run right through Main Street as well as Wall Street,” he said.

(Reporting By Sinéad Carew, additional reporting by Chuck Mikolajczak; Editing by David Gregorio)

Wall Street rises on gains in banks, strong retail sales data

May 17 (Reuters) – US stocks climbed on Tuesday, as Citigroup led a surge in bank shares after Berkshire Hathaway disclosed a big stake and solid retail sales in April eased concerns about slowing economic growth.

Nine of the 11 major S&P sectors advanced in morning trade, with financials up 2.3% and technology 1.8%.

Microsoft Corp. (MSFT), Apple Inc. (AAPL), Tesla Inc. (TSLA) and Nvidia Corp. (NVDA) gained between 1.4% and 4%, providing the biggest boost to the S&P 500 and the Nasdaq.

Banks jumped 3.5%, with Citigroup (C) climbing 7% after Warren Buffett’s Berkshire Hathaway (BRKa) disclosed a nearly USD 3 billion investment in the US lender.

US retail sales increased strongly in April as consumers bought motor vehicles amid an improvement in supply and frequented restaurants, providing a powerful boost to the economy at the start of the second quarter.

“Retail sales is one of the core data points that the Fed will look at as it thinks about how aggressive (it needs) to be to rein in inflation,” said Greg Bassuk, chief executive at AXS Investments in New York.

“It should allay some of those (recession) concerns on the basis that it is a positive signal on the trajectory and potential health of the US economy further into 2022.”

Fed Chair Jerome Powell is scheduled to speak later in the day and his comments would be parsed for clues on the path of future interest rate hikes. Traders now see a nearly 80% probability of a 50-basis point rate hike in June.

At 10:09 a.m. ET, the Dow Jones Industrial Average was up 292.68 points, or 0.91%, at 32,516.10, the S&P 500 was up 49.19 points, or 1.23%, at 4,057.20, and the Nasdaq Composite was up 186.51 points, or 1.60%, at 11,849.30.

However, rising costs weighed on Dow component Walmart Inc. (WMT), which fell 8.6% after the retail giant cut its annual profit forecast, signaling a bigger hit to margins.

Shares of rival retailers Costco (COST), Target (TGT), Dollar Tree (DLTR) slipped between 0.6% and 2.2%.

Home Depot Inc. (HD) added 1.9% after raising its full-year sales forecast on firm demand for home improvement tools and building materials.

United Airlines Holdings Inc. (UAL) rose 6.1% after the carrier lifted its current-quarter revenue forecast, boosting shares of Delta Air (DAL), American Airlines (AAL) and Spirit Airlines (SAVE).

A positive first-quarter earnings season has been overshadowed by worries about the Ukraine war, soaring inflation, COVID-19 lockdown in China and aggressive policy tightening by central banks.

The S&P 500 is down nearly 2% and the Nasdaq 3.9% so far in May, largely hit by declines in growth stocks.

US-listed Chinese stocks jumped on hopes that China will ease its crackdown on technology sector and COVID-19 pandemic.

Advancing issues outnumbered decliners by a 4.05-to-1 ratio on the NYSE and a 3.95-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 29 new lows, while the Nasdaq recorded 18 new highs and 100 new lows.

(Reporting by Amruta Khandekar and Devik Jain in Bengaluru; Editing by Arun Koyyur)

Oil falls 2% on Powell comments, hopes for Venezuela supply

NEW YORK, May 17 (Reuters) – After hitting seven-week highs, oil prices slumped 2% on Tuesday as Reuters reported that the United States could ease some restrictions on Venezuela’s government, raising hopes that the market could see some additional supplies.

Prices also fell after Federal Reserve Chairman Jerome Powell warned the economy could be hurt by attempts to reduce inflation.

For the first time since May 2020, the Brent international benchmark settled below US West Texas Intermediate crude. Refiners worldwide have scrambled to find alternative energy supplies after Russia’s invasion of Ukraine. US reserves are falling and that has raised the price for US-based crudes, said Andrew Lipow, president of Lipow Oil Associates in Houston.

Brent crude fell USD 2.31, or 2%, to settle at USD 111.93 a barrel, and US West Texas Intermediate (WTI) crude fell USD 1.8, or 1.6%, to settle at USD 112.40 a barrel.

Powell suggested there could be some economic pain involved in bringing inflation down. The US central bank will “keep pushing” to tighten US monetary policy until it is clear that inflation is declining, he said.

“Some of those comments tempered buying enthusiasm on the oil side,” said Phil Flynn, an analyst at Price Futures Group.

US President Joe Biden’s administration will authorize US oil company Chevron Corp. (CVX) to negotiate with Venezuelan President Nicolas Maduro’s government as soon as Tuesday, Reuters reported, citing sources. There is no final US decision yet on renewing Chevron’s current limited license to operate in Venezuela, the source said.

Oil prices have generally been rising as Russian supply is squeezed by bans from several countries and an economic downturn due to broad sanctions on Moscow imposed by the United States and allies.

Russia’s production dropped by 9% in April, and the country, part of the OPEC+ group, produced far below levels required under a deal to gradually ease record output cuts made during the worst of the pandemic in 2020.

This month, non-Russian deliveries into the Polish port of Gdansk hit the highest in at least seven years, as refiners in eastern Germany and Poland switched.

“Ultimately, this is a supply-side story,” said Fawad Razaqzada, analyst at City Index. “Unless OPEC and its allies ramp up production and fast, it is difficult to see how prices can go down meaningfully.”

EU foreign ministers failed on Monday in their effort to pressure Hungary to lift its veto on the proposed oil embargo. But some diplomats now point to a May 30-31 summit as the moment for agreement on a phased ban on Russian oil.

US crude and gasoline stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday. US government data is due on Wednesday.

(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler in London, Isabel Kua in Singapore and Yuka Obayashi in Tokyo; Editing by Marguerita Choy, Louise Heavens, David Gregorio and Cynthia Osterman)

Wall Street falls as growth stocks, glum China data weigh

May 16 (Reuters) – Wall Street’s main indexes fell on Monday as downbeat data out of China added to worries about a global economic slowdown against the backdrop of aggressive policy tightening by the US Federal Reserve.

Chinese and European stock markets fell, while oil slid as data showed China’s economic activity cooled sharply in April as COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment.

Nine of the 11 major S&P sectors declined in morning trade. Technology .SPLRCT and consumer discretionary stocks fell 1.6% and 1.8%, respectively.

Big growth companies such as Amazon.com (AMZN), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT), Apple Inc. (AAPL), Tesla Inc. (TSLA) and Nvidia Corp. (NVDA) slipped between 1.1% and 2.6%.

Energy shares outperformed and were up 1.5%.

Wall Street closed sharply higher on Friday, but still the S&P 500 and the Nasdaq indexes posted their longest weekly losing streaks in over a decade.

“Investors are just a little bit skeptical. They’re just sort of testing the waters to see if the rally is going to continue or go back down,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

“We’re clearly not out of the woods as far as the economy is concerned. We haven’t seen inflation peak yet, we can retest those lows and possibly move even lower.”

Investors have been worried that aggressive interest rate hikes by the Fed to combat decades-high inflation could tip the US economy into recession, with the conflict in Ukraine, supply chain snarls and the latest pandemic-related lockdowns in China exacerbating the situation.

Data on Monday showed factory activity in New York state slumped in May for the third time this year amid a collapse in new orders and shipments.

The S&P 500 and the tech-heavy Nasdaq have fallen 16.2% and 25.8%, respectively, so far this year, with growth stocks taking a hit on concerns that bigger interest rate hikes could hurt their future cash flows.

Traders are now pricing a near 86% chance of a 50 basis point hike by the Fed in June.

At 9:49 a.m. ET, the Dow Jones Industrial Average was down 231.10 points, or 0.72%, at 31,965.56, the S&P 500 was down 37.13 points, or 0.92%, at 3,986.76, and the Nasdaq Composite was down 148.58 points, or 1.26%, at 11,656.42.

Focus is now on the retail sales report due on Tuesday, after worrying inflation and consumer sentiment data last week.

Retailers such as Walmart Inc. (WMT), Home Depot (HD) and Target Corp. (TGT) are due to report their quarterly results this week.

Spirit Airlines (SAVE) jumped 8.2% after JetBlue Airways (JBLU) launched a hostile all-cash takeover bid for the discount carrier. JetBlue shares slipped 3.4%. Shares of rival bidder Frontier Group Holdings (ULCC) gained 3.9%.

Netflix Inc. (NFLX) rose 1.4% after Wedbush upgraded the streaming pioneer’s stock to “outperform” from “neutral”.

Declining issues outnumbered advancers for a 1.56-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 10 new highs and 60 new lows.

(Reporting by Amruta Khandekar and Devik Jain in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)

Israel Aerospace to supply electro-optics to Philippine Navy

JERUSALEM, May 16 (Reuters) – Israel Aerospace Industries (IAI) said on Monday it won a contract to supply the Philippine Navy with its maritime electro-optics systems that will be integrated on Philippine patrol boats.

Financial terms of the deal were not disclosed.

The systems by state-owned IAI are lightweight and compact multi-sensors observation system built for maritime applications. They are designed to operate during both day and night, and meet harsh environmental conditions such as shock, vibration from waves, and extreme temperatures, IAI said.

The payload provides real-time imaging, automatic video tracking, and precise target geo-location capabilities that can be used as a stand-alone observation system on small and medium sized vessels, it added.

(Reporting by Steven Scheer; Editing by Ari Rabinovitch)

Philippines removes last hurdle for stalled Tampakan copper-gold project

MANILA, May 16 (Reuters) – A provincial government in southern Philippines has reversed its 12-year-old policy banning open-pit mining, removing the final regulatory hurdle for the stalled Tampakan copper-gold project, the industry regulator said on Monday.

The Tampakan project in South Cotabato province is the Southeast Asian country’s biggest stalled mining project with development cost previously estimated at USD 5.9 billion before it was hampered by the provincial ban imposed in 2010.

In 2016, President Rodrigo Duterte picked an anti-mining advocate as environment minister, who enforced a nationwide ban on open-pit mining the following year, adding to the challenges that dismayed investors and stalling other open-pit projects.

Duterte, who will end his six-year term next month, lifted the nationwide ban late last year, one of his two landmark policy reversals that sought to revitalise the mining industry.

“South Cotabato’s local legislative body has voted to lift the provincial ban, clearing the only hurdle remaining in developing one of the largest copper-gold reserves in Southeast Asia,” Wilfredo Moncano, director of the regulator, the Mines and Geosciences Bureau, told Reuters.

“All the major requirements to legally support the mining operation has been complied with,” he added.

The Tampakan project, in which commodities giant Glencore previously had a controlling stake before it decided to quit amid regulatory uncertainties, has estimated resources of 15 million tonnes of copper and 17.6 million ounces of gold, according to developer Sagittarius Mines Inc.

But Duterte’s former environment minister who had opposed mining – the late Gina Lopez – had described Tampakan as “a 700-football field open-pit mine on … agricultural lands, affecting four provinces and six rivers”.

Duterte’s successor, Ferdinand Marcos Jr., said in an interview with local media during the campaign that he was open to allowing “sustainable” mining but was wary about the open-pit method of mineral extraction.

(Reporting by Enrico Dela Cruz; Editing by Kanupriya Kapoor and Edmund Blair)

Japan’s Nikkei extends gains, though China’s slowdown fears weigh

TOKYO, May 16 (Reuters) – Japan’s Nikkei stock average gained for a second day on Monday, taking cues from previous session’s tech-driven rally on Wall Street, although gains were curbed as China’s economic data fueled slowdown worries.

The Nikkei ended 0.45% higher at 26,547.05. The benchmark jumped as much as 1.55% to a one-week high of 26,836.96 in early trading, but shed most of the early gains after data showed a sharper-than-expected slowdown at factories and shops in major trade partner China.

Tech was by far the Nikkei’s best-performing sector, up 0.88%, while basic materials led the losers with a 1.01% drop.

Losers handily outnumbered winners though, with 137 of the Nikkei’s 225 component stocks declining, compared with 86 that rose and two that were flat.

The broader Topix edged down 0.05% to 1,863.26 after opening the day about 1% higher.

The Nasdaq led gains in the US stock indexes on Friday with a 3.7% advance. The Philadelphia SE Semiconductor Index jumped 5% on the day.

However, the mood in global markets soured on Monday after shockingly weak data from China underlined the deep damage lockdowns are doing to the world’s second-largest economy.

“The risks from China’s slowdown are one of the main reasons for the poor sentiment in equity markets,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management in Tokyo.

“At the same time, we may be close to the peak in terms of China concerns,” he said, with the government now starting to ease COVID-19 restrictions.

Shanghai will gradually begin reopening businesses such as shopping malls and hair salons from Monday, following weeks of strict lockdowns.

Earnings results also divided Japan’s market sentiment, with Friday marking the climax of the corporate reporting season. For instance, precision parts maker NTN Corp. was the biggest percentage gainer with an 11.68% surge versus Dowa Holdings’ 13.06% tumble.

Automakers were also mixed, with Mazda rising 5.65%, but Honda slumped 4.37% on a disappointing earnings forecast and motorcycle-maker Yamaha sank 9.11%, having reported underwhelming results after the bell on Friday.

(Editing by Sherry Jacob-Phillips)

Oil settles higher on demand optimism, gasoline strength

NEW YORK, May 16 (Reuters) – Oil prices rose on Monday on optimism that China would see significant demand recovery after positive signs that the country’s coronavirus pandemic was receding in the hardest-hit areas.

Brent crude futures for July delivery rose USD 2.69 to settle at USD 114.24 a barrel, a 2.4% gain, while US West Texas Intermediate (WTI) crude rose USD 3.71, or 3.4%, to USD 114.20 a barrel.

Shanghai aims to reopen broadly and allow normal life to resume for the city’s 25 million people from June 1, a city official said on Monday, after declaring that 15 of its 16 districts had eliminated cases outside quarantine areas.

However, it is estimated that 46 cities in China are under lockdowns, hitting shopping, factory output and energy usage.

“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.

In line with an unexpected sharp fall in industrial output in April, China processed 11% less crude oil, with daily throughput the lowest since March 2020.

US gasoline RBc1 futures set an all-time high again on Monday as falling stockpiles fuelled supply concerns.

Stockpiles in the Strategic Petroleum Reserve fell to 538 million barrels, the lowest since 1987, data from the US Department of Energy showed on Monday.

“Record high gasoline pricing has shown no sign of spurring demand destruction with the US economy appearing sufficiently strong to drive a robust kickoff to the heavy driving season in just a couple of weeks,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Oil prices also found some support as the European Union’s diplomats and officials expressed optimism about reaching a deal on a phased embargo of Russian oil despite concerns about supply in eastern Europe.

However, EU foreign ministers failed on Monday in their effort to pressure Hungary to lift its veto of the proposed oil embargo, with Lithuania saying the bloc was being “held hostage by one member state”.

German Foreign Minister Annalena Baerbock said the bloc would need a few more days to find agreement.

“With a planned ban by the EU on Russian oil and slow increase in OPEC output, oil prices are expected to stay close to the current levels near USD 110 a barrel,” said Naohiro Niimura, a partner at Market Risk Advisory.

(By Laura Sanicola; Additional reporting by Bozorgmehr Sharafedin in London; Additional reporting by Yuka Obayashi in Tokyo; Editing by Mark Porter, Tomasz Janowski and Richard Pullin)

Signs of market bottom elude investors after steep selloff

NEW YORK, May 13 (Reuters) – Investors are studying an array of indicators for clues on how much further a brutal slide in U.S. stocks could run, with some signs suggesting the tumble in equities may not be over.

The S&P 500 extended its decline to nearly 20% from January’s record peak on Thursday before an end-of-week bounce, approaching the cusp of a bear market amid concerns that persistently high inflation will prompt more aggressive Federal Reserve interest rate increases that could undermine the economy. Declines have been even steeper in the tech-heavy Nasdaq Composite, which is down 24.5% year-to-date.

Despite those losses, many widely followed indicators do not yet show the pervasive panic, supercharged volatility and outright pessimism that have emerged in past market bottoms – a potentially worrisome signal for those looking to step in and buy on the cheap after the most recent selloff in stocks.

Indeed, stocks ripped higher on Friday, with some pandemic era favorites such as the ARK Innovation ETF showing double-digit percentage gains, albeit from depressed levels.

“I don’t think we are out of the woods yet on a near-term basis,” said Mark Hackett, chief of investment research at Nationwide. “That being said, investor expectations have been reset dramatically.”

For instance, the Cboe Volatility Index, known as “Wall Street’s fear gauge,” now hovers around 30 compared with a long-term median of nearly 18. Past market bottoms, however, have coincided with an average level of 37, and the VIX climbed above 80 in March 2020 during a COVID-19-fueled market plunge after which the S&P 500 more than doubled from its lows on the back of unprecedented Fed stimulus.

Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, is looking for a one-day spike to a level of at least the mid-40s as likely “where you actually see panic.”

“If I don’t see panic … it might mean we are not at the bottom yet,” he said.

Hackett, of Nationwide, is watching options trading for a spike in the ratio between puts, which are typically bought for downside protection, and calls.

“Most of these indicators, put/call being one of them, are already very bad historically,” Hackett said. However, he said, “we haven’t seen that capitulation where everything is flashing red.”

Meanwhile, analysts at BofA Global Research on Friday shared their “capitulation” checklist, which showed that while some indicators, such as investor cash amounts, have hit critical territory, others have not met levels attained during the peak of past selloffs.

“Fear & loathing suggest stocks prone to imminent bear market rally but we do not think ultimate lows have been reached,” they wrote.

Next week, investors will focus on earnings results from major retailers including Walmart Inc. (WMT) and Home Depot Inc. (HD) as well as a report on monthly U.S. retail sales.

Whether clear signs of a bottom emerge or not, stock sentiment could also be swayed by market expectations of how aggressively the Fed will need to raise interest rates in the remainder of the year. The central bank has already raised rates by 75 basis points since March and has signaled that a pair of 50 basis-point increases may be coming in its next two meetings.

“I think you are going to have to at least wait for two or three 50 basis-point rate hikes before you start to see any real signs of people coming back in,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

Rather than looking for signs of a bottom, Willie Delwiche, an investment strategist at market research firm All Star Charts, is focused on clearer indications that stocks can mount a sustained rally.

Among the factors he watches is whether the net number of 52-week highs versus lows on the New York Stock Exchange and Nasdaq combined turns positive, from current negative levels. Another is the percentage of S&P 500 stocks making 20-day highs rising to at least 55% from less than 2% at last count.

“Too many people right now are trying to pick a bottom and that’s proving to be futile and expensive,” Delwiche said. “This is a risk-off environment … Moving to the sidelines, letting the volatility play out, makes a lot of sense for investors.”

(Reporting by Lewis Krauskopf in New York; Editing by Ira Iosebashvili and Matthew Lewis)

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