The S&P 500 has dropped for three straight weeks amid concerns about inflation and Fed rate hikes.
The risk-reward for equities is now “very poor,” the firm's strategists wrote.
Economic indicators show that the Fed's mission to bring down inflation is “very much unaccomplished,” the bank's analysts wrote.
Market participants have been finding new and more sophisticated ways to avoid scrutiny by regulators.
Firm strategist Michael Wilson sees the S&P 500 ending the year at 3,900 index points.
A risk is that inflation flares up again over the next few months, the bank's analysts said.
An earnings recession and continued Fed tightening remain as headwinds to equities, the firm's analysts said.
Investors are chasing European stocks at the fastest pace in nearly a year.
Both investors and some top strategists are warming to stocks globally amid optimism over cooling inflation and China's reopening.
Goldman Sachs, Morgan Stanley, Credit Suisse Group AG and Barclays Plc have all announced job cuts.
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