UBS, Bank of America Recommend Buying U.S. Stocks

(Bloomberg) -- Investors should buy U.S. stocks in the ongoing market selloff, according to UBS AG and Bank of America Corp. strategists, because share prices already reflect a slowdown in earnings growth.

``We understand the macro challenges facing the economy and many uncertainties, but we believe this level of pessimism is unwarranted,'' UBS equity strategist David Bianco wrote in a note to investors today. ``The market is panicked over a substantial and secular drop in earnings power.''

More than half of the world's biggest stock indexes fell into a bear market this week on mounting concern the U.S. is headed for a recession. The Standard & Poor's 500 Index fell 0.7 percent to 1,316.01 as of 11:06 a.m. in New York today, even after the Federal Reserve lowered its benchmark rate in its first emergency move since 2001.

The U.S. index has fallen 16 percent from a record reached on Oct. 9.

``It makes sense for investors to consider increasing their exposure to equities'' after declines in the past 12 months, wrote Thomas McManus, chief investment strategist at Bank of America's securities unit, in a report today. He advised buying ``gingerly or aggressively,'' depending on each investor's goals.

 

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