Should You Buy the Dip or Wait For Better Prices?

After this month’s selloff that nearly put the S&P 500 Index in corrective territory and the tech-heavy Nasdaq Composite in a bear market, strategists from Goldman Sachs (NYSE: GS) to Citigroup (NYSE: C) say the time to buy is now.

In a note to investors on Wednesday, Peter Oppenheimer, chief global equity strategist at Goldman Sachs said that in his firm’s view (via Bloomberg) “|a|ny further significant weakness at the index level should be seen as a buying opportunity.” Citi strategists including Robert Buckland, meanwhile, said that the “rapid de-rating of growth stocks may slow as real yields stabilize.”

Fiscal 2022 has started off on a sour note for the equity market amid bonds consolidating their large yield bases, expectations for Fed tightening, and the threat of a war on the Russia-Ukraine border.

“The key thing for equities from here is how much any of this shift upward in interest rate expectations and indeed in financial conditions will hit growth,” Oppenheimer said in an interview with Bloomberg Television.

According to the Goldman strategist, who believes equities have a tendency to digest higher bond yields during Fed hiking cycles as long as the growth/rates mix is favorable, the shift upward in interest rate expectations is going “to be key to determine where equity markets stabilize.”

Citi’s strategists echoed Goldman’s sentiment, saying that their bear market analysis is suggesting to buy the dip.

Price Action

As of writing, the S&P 500 is up 1.65% to 4,428. The Dow Jones Industrial Average gained 307 points to 34,600, and the tech-heavy Nasdaq gained 290 points, or 2.6%, to 13,810.

Reference: Bloomberg

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