Given the uncertainty, it would be reasonable for investors who are unable or unwilling to ride out the potential for further near-term losses in risk assets to adopt more conservative positions. We may see more damage and more volatility before conditions improve, but we believe investor pessimism is peaking. Last week, the S&P 500 fell back to the low it reached in mid-January, before advancing again,1 which may represent an important test. This could suggest stock prices are at the beginning of a bottoming process.
Bob Doll is senior portfolio manager and chief equity strategist at Nuveen Asset Management.