BlackRock (NYSE: BLK), the world’s largest asset manager, has expressed a cautious outlook on the United States stock market.
The firm’s sentiment comes as the stock market attempts to recover after the April 4 trade tariff-induced sell-off. As of press time, the benchmark S&P 500 was up 2.5%.
Despite this momentum, the BlackRock Investment Institute, led by Jean Boivin, stated that the cautious sentiment is driven by rising policy uncertainty that could hinder economic growth and weigh on stock performance.
“We turn cautious on a shorter, three-month tactical horizon. <…> Policy uncertainty may weigh on growth and stocks in the near term—and the longer elevated uncertainty persists, the more damage it can do,” Boivin said.
To this end, the firm adjusted its investment outlook by shifting its U.S. stock weighting from ‘Overweight’ to ‘Neutral’ over a three-month tactical horizon. The move reflects a decision to reduce risk exposure amid heightened market uncertainty.
“We’re wary over the next three months. <…> A shorter tactical horizon means giving more weight to our early view that risk assets could stay under near-term pressure until uncertainty starts to dissipate,” the analyst wrote.
Room for recovery
As part of its updated strategy, BlackRock is also lowering its exposure to Chinese equities and increasing its preference for short-term U.S. Treasuries. According to Boivin, these government bonds are safer during potential market disruptions.
Despite the short-term caution, BlackRock maintained a positive long-term view on American stocks and expects that, over time, the market could regain global leadership, supported by structural trends such as the advancement of artificial intelligence (AI).
Before BlackRock’s warning, on April 7, CEO Larry Fink projected that the stock market could fall 20%, citing concerns about a possible contracting economy.
However, Fink noted that the downturn should be viewed as a buying opportunity, as the market is likely to see a recovery.
Additionally, banking giant Goldman Sachs is another Wall Street entity that has raised concerns about the stock market. According to the bank, the recent sell-off could turn into a long-lasting cyclical bear market due to rising recession risks, which the lender has placed at a 45% chance.
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