Last week’s rebound may be nothing more than a “dead cat bounce” because global investors remain overwhelmingly bearish on America, analysts warn,

According to a recent Bank of America (BofA) survey, foreign investors are more pessimistic about U.S. stocks than they’ve been in 30 years.

In April, surveyed fund managers were a net 36% underweight U.S. stocks in April, a sharp reversal from being 17% overweight in February.

It marks the largest two-month sentiment swing ever recorded. What this effectively means is that global investors made a full U-turn on U.S. stocks since Trump's "Liberation Day."

As another piece of evidence of this shift, Goldman Sachs data shows that foreign investors have dumped $63 billion worth of U.S. stocks since early March, with European investors leading the retreat.

“This dynamic poses a substantial risk to equity valuations because foreign investors entered 2025 with a record 18% ownership share of U.S. equities,” Goldman’s portfolio strategy team, led by Daniel Chavez, wrote in a note to clients.

Goldman analysts noted that since 1980, there have been only 10 other instances of heavy foreign selling. The silver lining is that in seven of those cases, U.S. markets held up despite the pressure.

Is a full recovery possible? Probably not

Even with the S&P 500 up more than 10% from its April lows, many analysts remain skeptical that the U.S. stock market will fully recover this year.

According to Carson Investment Research, only three major stock-market selloffs have been followed by full reversals: in 1982, 2009, and 2020.

But 2025 could be different.

Carson Group’s Ryan Detrick notes that “the Fed probably isn’t going to come to the rescue this time, since they’re still very worried about inflation.”

“That puts them in a hard spot right now,” he said.

Kathryn Rooney Vera, chief market strategist at StoneX Group, shares a similar view, warning that the ongoing trade war — already dampening imports and consumer spending — doesn’t inspire confidence in the rally.

"A lot of damage has already been done on the economic front, and I expect hard data will soon reflect that," Vera said.

Fortune 500 CEOs say that the real economic impact of the trade war will start showing up on corporate balance sheets only later this year, making a full market recovery even harder to achieve.

Strategists at Deutsche Bank are already bracing for a downturn, forecasting that the trade war will push U.S. companies into an earnings recession this year.

They've lowered their full-year earnings estimates for S&P 500 companies by 15%.