After Nine Consecutive Weeks of Gains, Wall Street Analysts Collectively Turn Cautious
Taylor Wilson
The S&P 500 has rallied 20% over nine consecutive weeks — the strongest such streak in 75 years — yet analyst downgrades now outpace upgrades, signalling a widening gap between price action and professional sentiment.
Nine weeks, 20% — how rare is this rally?
The S&P 500 has risen for nine straight weeks since mid-April, gaining a cumulative 20% — the strongest run over an equivalent span in 75 years.
Yet Bloomberg Intelligence data show analysts are downgrading S&P 500 constituents faster than they are upgrading them — only the second time this has happened since the Iran war began.
This means → prices are climbing, but the people rating these stocks are growing more cautious. The two lines are moving in opposite directions.
Why aren't analysts chasing the rally?
Jefferies data show 82% of Russell 3000 stocks carry a "buy" rating — slightly above the long-term average but well below the 90% peak during the dot-com bubble.
Jefferies senior VP Andrew Greenebaum calls this "the most reluctant rally in recent memory."
In plain terms = sell-side firms have not flipped to full-on buy mode, which means sentiment has not reached the kind of euphoria that typically signals a top — from a contrarian standpoint, that is actually a healthy sign.
What are neutral indicators saying?
Bank of America's contrarian indicator — tracking strategists' recommended equity allocation — has edged up over the past month but remains in a "neutral zone," below prior peaks.
Strategists Victoria Roloff and Savita Subramanian wrote on June 1 that the indicator implies a roughly 12% price return for the S&P 500 over the next 12 months.
The latest AAII survey also shows more bears than bulls among individual investors.
Surveys say cautious — but where is the money going?
iCapital global investment strategist Dan Suzuki notes that surveys do not tell the whole story — household equity allocations are hovering near all-time highs.
Retail investors have stepped up purchases of leveraged equity-linked products; AAII's equity-exposure gauge has hit 69.8%, close to the highest level since 2000.
This means → investors say "cautious," but their money is already heavily deployed. A clear gap has opened between surveyed sentiment and actual positioning.
Where are bulls concentrated — and where are the risks?
Suzuki notes that bullish positioning is concentrated in AI, which offers the strongest earnings growth and momentum; outside that pocket, optimism is noticeably fragmented.
The market still faces multiple risks: valuations sit at historic highs and tech-sector concentration has reached extreme levels.
On the geopolitical front, US-Iran talks on reopening the Strait of Hormuz have stalled. Iran on Monday suspended "negotiations and document exchanges" through mediators and warned it could strike northern Israel if Israeli attacks on Lebanon continue.
Content is for reference only, not financial advice.