Citadel Becomes Constructive on US Equities for Q4 Amid Five Tailwinds

Citadel Securities, one of the largest market makers in Wall Street, has recently turned more positive regarding American assets in the fourth quarter. According to the firm's assessment, five factors are contributing to this change: the normalization of excessive financial leverage from September, the potential for third-quarter earnings to drive stock prices higher, the resumption of buyback windows by early November, and the typical favorable gains in the fourth quarter. However, macroeconomic risks still persist, with the Fed's hiking path, the escalation of the Iran conflict that could affect commodity prices and thus market pressures, being key concerns. The opening of buyback windows around early November will also be crucial to confirm these positive expectations.

"The decline of indices last month has largely completed the work necessary for normalizing leverage, setting the stage for a recovery in markets," said Scott Rubner, head of equity and equity-derivatives strategy at Citadel. Favorable earnings from the second quarter and the typical history of favorable gains in the fourth quarter also contribute to this positive outlook. Nonetheless, investors should remain vigilant about potential inflationary pressures arising from the escalation of the Iran conflict and the Fed's actions.

Source original: ForexLive (InvestingLive)