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Stocks bear market 'will continue into the first quarter,' portfolio manager says

Battered investors hoping for a reprieve from the teeth of the bear market may have to wait until early 2023.

That's the blunt assessment from Pimco portfolio manager Erin Browne.

"I think it [the bear market] will continue into the first quarter of next year because the Fed is going to keep hiking [rates]," Browne warned on Yahoo Finance Live (video above). "And so it's hard to have with any certainty right now what next year will bring."

That's hardly welcome analysis in what has been a brutal start to fall for markets at the hands of hawkish Fed commentary, rising interest rates, souring economic data and turmoil in global currency markets.

The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) are down 8.1%, 9.2% and 9.3% over the past month, respectively, and once-hot momentum names in tech are being crushed as traders unwind leveraged bets amid rising interest rates.

Not helping market sentiment has been corporate profit warnings from large, well-known companies.

Just this week brought a material full year profit warning from North Face owner V.F. Corp. as retailers battle the economic slowdown. Earlier this month, FedEx (FDX) shocked the market by slashing its full year guidance. And reports this week have Apple (AAPL) cutting iPhone production on growth fears.

An image create with DALL·E AI software. (OpenAI)
An image create with DALL·E AI software. (OpenAI)

Investors are now bracing for an ugly third quarter earnings season kicking off shortly, and potentially a fresh leg lower for the markets heading into 2023.

"I do think as we turn the corner into the second half of next year," Browne added, "we'll be at lower inflation levels, the Fed should be at peak in terms of its hiking cycle, and I think you can start to see risk assets stabilize. But for now, over at least the next six-month horizon I am still concerned about equities."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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