Despite recent economic fluctuations, Wall Street analysts at Piper Sandler remain bullish on stocks, especially high-quality stocks. They argue that the unemployment rate still has room to rise before triggering a broad market decline.
“We remain constructive on equities,” Piper Sandler said, despite recent evidence that tightening monetary policy is impacting several aspects of the economy.
They recognize a shift in investor sentiment, with some market segments reacting negatively to bad news. According to Piper Sandler, this indicates a growing concern about inflation versus unemployment.
Their customer research reinforces this image. “We agree with many of our clients who responded to our survey and say the unemployment rate leading to a broad decline in stocks is still well above the current 4.1%,” Piper Sandler said.
Piper Sandler sees historically known culprits for market declines: higher interest rates and unemployment. While they acknowledge a more balanced risk profile than in 2023, they downplay any direct threat from either factor.
In reviewing the research, the company believes that investors won’t hit the panic button until the unemployment rate rises to 4.5%. Until then, Piper Sandler maintains a bullish outlook, especially for high-quality stocks.
