Is the short-term outlook for US stocks mostly negative? Wall Street investment banks are turning to a cautious stance one after another

In recent weeks, the volatility of the US stock market has significantly increased, with traders becoming increasingly concerned about any signs indicating that the US economy is slowing down faster than expected. The S&P 500 Index has dropped by about 3% from its peak in late August. Rebecca Cheong, Chief Equity Derivatives Strategist at UBS AG, stated that she expects the S&P 500 Index to drop by at least 10% from its peak in the next month. The stock market is in a tense state, with the black line representing the VIX Index and the red line representing the S&P 500 Index. Rebecca Cheong wrote in a report to clients on Tuesday, " I am tactically bearish on US stocks for the next two months, and even mildly disappointing economic data to be released could trigger a significant decline." She recommended investors to purchase tail hedging funds to prevent losses, and listed iShares Russell 2000 Index ETF (IWM), SPDR Financial Select Sector Fund (XLF US), and iShares iBoxx High Yield Corporate Bond ETF (HYG) as preferred options. Cheong added that while her view reflects increasing market pessimism, it is not a long-term view. "If there are no news events, the market may just continue to see moderate selling," she added. Other strategists also hold a short-term cautious stance, such as Christian Mueller-Glissmann from Goldman Sachs. In a report on September 9th, he stated that the risk-adjusted return of stocks will decline by the end of the year, but the S&P 500 Index is unlikely to enter a bear market. He mentioned that US stocks are unlikely to plummet by 20% or more, as the risk of an economic recession remains low and the Federal Reserve is expected to cut interest rates. His team, led by him, indicated that despite the impact of rising valuations, mixed growth prospects, and policy uncertainties, while there may be more downside risks for the stock market by the end of the year, the likelihood of a full bear market is small, as the economy is also supported to some extent by "healthy growth in the private sector." Furthermore, historical analysis by strategists shows that driven by longer business cycles, lower macroeconomic volatility, and central bank policy "cushioning," the frequency of the S&P 500 Index falling by more than 20% since the 1990s has decreased. In their report, they stated that they maintain a tactically neutral stance in asset allocation, but "moderately support chasing risks" over a 12-month horizon. Additionally, data from Citigroup shows a "bearish bias," indicating that major US stock indices are likely to further decline in the short term