Despite recent economic turmoil, Wall Street analysts at Piper Sandler remain bullish on stocks, particularly high-quality ones. They say the unemployment rate still has room to rise before triggering a broader market decline.
“We remain constructive on equities,” says Piper Sandler, despite recent evidence that monetary policy tightening is affecting several aspects of the economy.
They acknowledge a shift in investor sentiment, with some segments of the market reacting negatively to bad news. This, according to Piper Sandler, suggests growing concerns about inflation versus unemployment.
The survey they conducted with their clients reinforces this view. “We agree with many of our clients who responded to our survey and say that the unemployment rate that is causing a general decline in stocks is still well above the current figure of 4.1%,” says Piper Sandler.
Piper Sandler sees historically known culprits for market declines: higher interest rates and unemployment. While acknowledging a more balanced risk profile compared to 2023, it downplays any immediate threat from either factor.
After evaluating the survey, the firm believes that investors will not panic until the unemployment rate rises to 4.5%. Until then, Piper Sandler maintains a bullish outlook, especially for high-quality stocks.