Citigroup’s proprietary Bear Market Checklist triggered 11.5 out of 18 risk flags. This reading marks the highest level of market risk since the 2008 global financial crisis. Citi research indicates this level of triggered flags historically precedes accelerating market stress.
The warning followed a strong May jobs report released on June 5. The Nasdaq Composite fell over 4% on June 5 following the employment data. Investors sold off technology stocks while recalibrating expectations for Federal Reserve interest rate cuts.
Citi strategists currently maintain a constructive year-end outlook for equities. The bank cautioned that additional risk flags would change their current guidance on buying market dips.