Investors were the most bearish on U.S. stocks in at least four years as money manager scaled back their outlook for global growth and raised their cash holdings, a BofA Merrill Lynch Global Research survey showed.
A net 14% of respondents, who together manage about $530 billion, said the U.S. was the region they would most like to have under-represented in their investments, a level not since November 2006. Last month, the same amount said America was the region on which they would most like to have an overweight stance.
The MSCI World Index, a gauge of stocks in 24 developed countries, has fallen 12% from this year's high on April 15 amid concern that European sovereign debt levels may harm global growth. The U.S. Standard & Poor's 500 Index has tumbled 11% in the same period compared with a 6% drop in the Stoxx Europe 600 Index.
“There has been a definite change in perception of the U.S. being somehow insulated from what is happening in the rest of the world,” said Gary Baker, head of European equity strategy at BofA Merrill Lynch at press briefing in London on Tuesday. “Investors are starting to question those assumptions.”
A Labor department report this month showed U.S. employers eliminated jobs in June, adding to concern the economy is falling back into recession. Payrolls declined by 125,000 after an increase of 433,000 in May.