By Ian Salisbury
Wall Street analysts are bullish on the stock market. It could be a big reason to worry.
Despite the slowing U.S. economy and the war in Iran, stock analysts at investment banks and research firms are more optimistic about the market than at any time in more than a decade, according to a report last week from FactSet.
Analysts have Buy rankings on 58.2% of companies in the S&P 500 heading into the second quarter, FactSet found. That compares to 36.5% of stocks that rated Hold and just 5.3% deemed Sell. Assuming the rate holds to month's end, it will mark the highest monthly share of Buy ratings going back to at least 2010, FactSet noted. The five-year average is 55.6%.
For investors, Wall Street's optimism is a flashing red light, notes DataTrek co-founder Nicholas Colas, who flagged the FactSet report in his newsletter Monday, calling it, "the most disturbing graph we saw this entire weekend."
Colas points out the last time analysts were this uniformly bullish was in February 2022, when 57.5% of the ratings were Buys. In retrospect, their optimism looks like complacency. While the S&P 500 had delivered double-digit returns the previous two years, inflation was already close to 8%; the Federal Reserve would start hiking interest rates the next month. In the end, the S&P 500 finished down 18% that year.
"It was one of the top 10 worst years since the Great Depression," Colas said in an interview Monday.
Could the market be in for another gut punch? "That is what the data strongly suggests," he said.
Of course, one reason stock analysts may be slow to start issuing downgrades is the uncertainty surrounding the geopolitical situation. While the war in Iran has dragged on for nearly four weeks and oil remains above $90 a barrel, many investors are clinging to the hope that a quick resolution will put markets back on the solid footing they seemed to enjoy just a few weeks ago.
No one wants to issue a downgrade, only to end up rescinding it if the world changes just a few days later.
That said, the market itself isn't waiting. On Tuesday, the S&P 500 was down 0.7% in early trading. It's down 4.9% so far in March.
Write to Ian Salisbury at ian.salisbury@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 24, 2026 12:20 ET (16:20 GMT)
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