Standard & Poor's recommends that investors sell U.S. stocks and buy bonds in the wake of the market’s recent weakness.
The S&P 500 stock index has dropped 8 percent so far this year amid worries about Europe’s debt crisis and the tenuous global economic recovery.
"High volatility, caused by global growth concerns and sovereign debt worries, increase the range of investment outcomes, in our view, and merits a larger-than-average fixed income allocation," S&P wrote in a note to customers obtained by CNBC.
The firm recommends that investors cut their U.S. equity weighting to 40 percent from 45 percent and increase their fixed-income allocation to 30 percent from 25 percent.
"Chart support for the major indices is giving way, suggesting to us that this correction may morph into a bear market," the note said.
The S&P 500 could drop to about 900 by September or October, S&P says. But then it expects a major rally.
It predicts that the S&P 500 will end the year at 1,190.
Others share S&P’s short-term bearishness on stocks.
“It’s a data-dependent market, the leading indicators are turning down and growth is slowing,” Mike Morcos, senior money manager at Old Second Wealth Management, told Bloomberg.
“It now turns out the recovery is weaker than the market thought earlier in the year.”
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