Some analysts are bullish on the market’s potential to rebound now that OPEC+ has promised to increase output to ameliorate the effects of the war in Ukraine on energy prices.

Meanwhile, the Labor Department reported a small decline in inflation, leading Tim Holland, chief investment officer at Orion Advisor Solutions to note, “If we have seen peak inflation and peak investor pessimism the path forward for the market should be much more constructive.”

However Credit Suisse’s London-based global strategy team note a cautious marker some investors may want to factor into their decision-making. Their team has been cautious with stocks since February and show no sign of changing sentiment. They still believe a recession is a real risk and their fair value models don’t show any upside. More importantly, their research shows the risk to earnings remains high.

Strategists led by Andrew Garthwaite noted, “Earnings revisions have started to fall and 71% of the time when this happens, markets fall over the next quarter. Current PMIs imply significant further downside to revisions. We see clear risk of negative EPS in 2023.”

The Credit Suisse team feels they will need to see clear signs that the Fed interest rate hikes are reigning in the economy before they will turn bullish.

“What do we need to see to be more constructive? Clear signs of U.S. wage growth slowing, U.S. lead indicators falling sharply indicating that the Fed needs to do less to get unemployment rising above full employment, signs of a new paradigm showing that margins can stay high even as nominal GDP slows by [8 percentage points], clear cut undervaluation on [equity risk premium] model, or credit spreads discounting a recession,” they said.