Even with yesterday’s uplifting performance for equities, there were plenty of Jekyll and Hyde moments. At its worst, the benchmark was down 1.7% midmorning, only for the buyers to show up around lunchtime. When the dust settled, the S&P closed up by 24.34 points, or 0.6%. Incidentally, the rally started even before the board of Twitter confirmed it had agreed to sell the social media platform to the world’s richest man, Elon Musk.

Even with yesterday’s positive showing, the S&P is down 5.17% in April, dangerously close to posting its worst monthly performance since March 2020—i.e., the nadir of the COVID collapse in equities.

As Deutsche Bank research strategist Jim Reid wrote in an investor note this morning, the S&P is “still at risk of taking the ignominious title of worst monthly return since COVID if it dips below this January’s -5.26% return.”

As of yesterday's close, the S&P was hovering around correction territory year to date, or down 10%. The Nasdaq has fared even worse, with once high-flying FANG stocks sinking nearly 9% last week alone.

So far, few on Wall Street are ready to call a bottom even as corporate earnings season continues to generate a surprisingly strong number of bottom-line beats.

Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, was the latest one to warn investors of more pain ahead. "Investors seem to be banking on peaking inflation, strong earnings growth, and that there is no good alternative to U.S. equities. In our view, the bear market is not over," she said.

Shalett's bearish call underscores deeper pessimism at Morgan Stanley. In a separate note on Monday, strategists at the investment bank used almost identical language to say the S&P has further to fall. “The S&P 500 appears ready to join the ongoing bear market,” wrote the equities strategy team led by Michael J. Wilson.

Futures under pressure

On Tuesday, U.S. futures remained under pressure. At 5 a.m. ET, S&P futures were down 0.3%, off earlier modest gains. A further signal of investor bearishness: the safe-haven dollar was gaining, as were gold futures.

Across the Atlantic, the European bourses were mostly higher, after a rough Monday selloff. Asian stocks were mixed, with Shanghai Composite again deep in the red.

Wall Street is looking for any indication the bearish mood will shift. One indicator, closely watched fund flow data, shows zero relief.

According to Goldman Sachs, net flows into global equity funds were negative last week for a second consecutive week. Over that span, investors pulled $30 billion out of equity funds, the largest pullout since the first quarter of 2020—again, when COVID jitters were clobbering the markets.