Top Wall Street strategist Marko Kolanovic said the recently rally in stocks was merely a dead cat bounce as there has been no material improvement in fundamentals. "For a rational investor, we think this makes little sense and that most of the inflows over the past 2 weeks were driven by systematic investors, short squeeze and a decline in VIX," Kolanovic, JPMorgan's chief global markets strategist, said in a note Monday. Stocks staged a swift comeback last month as investors shook off recession fears worsened by the banking crisis. The S & P 500 jumped 3.5% in March, while the Nasdaq Composite added 6.7%, notching its best quarter since 2020. The tech-led rally was fueled by a decline in bond yields, but the widely followed strategist said investors shouldn't celebrate falling yields right now as they have become a pressing recession signal. "Any decline in yields is not a sign that the Fed is about to bring a punch bowl for tech stocks, in our view, but rather a sign that recession probability has increased," Kolanovic said. "We expect a reversal in risk sentiment and the market re-testing last year's low over the coming months." .SPX 1Y mountain S & P 500 The S & P 500 hit a 52-week low of 3,491.58 on Oct. 13. The equity benchmark would have to fall about 15% from here to reach that low. Wall Street strategists on average see the S & P 500 ending the year at 4,127, implying that stocks would stall from here, according to CNBC's Market Strategist Survey , which rounds up 15 top strategists' forecasts. Kolanovic gained a wide following after correctly calling stocks' dramatic movements during the pandemic. He admitted he was too bullish heading into 2022, and got increasingly cautious during last year. The strategist recently warned of a "Minsky moment" in markets amid the recent bank failures, geopolitical shocks and uncertainty about central bank policy. "The impact of the monetary tightening historically worked with a lag, and we never had a sustained rally before the Fed has even stopped hiking," Kolanovic said. The strategist said he maintains a bullish stance on international markets versus the U.S. He added that investors should add to bond proxies and to go underweight value stocks. — CNBC's Michael Bloom contributed reporting.
