Wall Street goes bearish on US stocks A view of Wall Street from the steps of Federal Hall in lower Manhattan Wall Street strategists are expressing their most bearish views on US equities in nearly three years as investor worries mount over the threat of a eurozone break-up and the outlook for the global economy. The bearish outlook comes even as stocks enjoyed their best first quarter since 1997. However, since stocks peaked in March, the S&P 500 has shed more than half its prior gains for the year. Big Wall Street companies have cut their asset allocation to equities to its lowest level since May 2009, according to a Bloomberg index that measures average allocation for stocks. Asset allocation to equities has declined to 52 per cent from 62 per cent in January. Others stated that such a degree of bearishness at big Wall Street groups actually provided a contrarian sign. In turn, Wall Street strategists have become more bearish, with an index that measures their outlook currently at its lowest level since May 2009 - just as equities were recovering from their financial crisis depths. Driving the negative sentiment is a combination of fears, led by contagion worries from the eurozone debt crisis for financials and the global economy. Selling of US equities has also increased in the wake of weak US jobs data during March and April. This comes after corporate earnings expanded at their slowest pace during the first quarter since late 2009. With most economists expecting weaker economic growth during the summer, this has raised the prospect of further pressure on profits. Throughout the first-quarter rally, Goldman Sachs maintained a 2012 target for the S&P 500 of 1,250, more than 6 per cent below the benchmark index's current level of 1,340 points. David Kostin, US portfolio strategist at Goldman, said he projected corporate margin growth would be flat through 2013. He added that demand from consumers was not growing at a fast enough pace because incomes have stagnated. In addition,macro economic concerns have added to an increasingly negative outlook for stocks with the US presidental election looming in November. "What we can say about this year's remaining earnings seasons is that, on the plus side, perhaps analysts expectations are so low that companies will beat them," said Nicholas Colas, chief market strategist at ConvergEx noted. On the cautionary side, it doesn't seem likely the market will make an easy recovery from its present indecisiveness. Barry Knapp, Barclays" chief equity strategist, said a near-term bottom was unlikely. Mr Knapp is recommending the bank's clients reduce exposure to cyclicals and increase exposure to defensive sectors such as utilities. "Even if valuations become more compelling, we still struggle to see a catalyst that would induce investors to rethink their [negative] outlook," he said. Some see the current dip as a buying opportunity. Investors of all types clearly don't like stocks. But these types of sentiment measures are lagging indicators," said Justin Walters at Bespoke Investment Group. One month from now, stocks will probably be higher from here. And that sounds like a buying opportunity to us.