The stock market's euphoric rally has been a head fake, Wall Street's top strategists warn

The Nasdaq Composite saw double-digit gains of 11% in January. S&P 500 and Dow Jones Industrial Average also had strong month endings. Speculations that high inflation is in the future and that the Federal Reserve will soon reverse its aggressive rate increases have been the basis of investor trading. He also said that he was skeptical about the market's gains in 2023. Thursday. Colas stated that this indicates that real interest rates are rising in the past month. This suggests that investors want a higher inflation-adjusted rate of return. In other words, it isn't just inflation that has caused the recent rise in yields. Kolanovic sent a note earlier this month to clients, writing that despite equities trading at near the last summer's peak and at above-average multiples despite weakening earnings, and the recent sharp rise in interest rates, "we maintain that markets overprice recent good news about inflation and are complacent with risks."