"A correction in the New York stock market is imminent"

[The Financial News]  
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Predictions that the New York stock market will soon enter a correction are spreading rapidly.
The outlook is unsettling investors as the S&P 500 Index fell for a third straight day on the 19th local time amid surging Treasury yields.
Vincent Mortier, chief investment officer at Amundi, told the Financial Times (FT), "We will see a correction," adding, "The question is not whether it will happen, but when."
Mortier said bond investors are worried that, after a blockade of the Strait of Hormuz, prices for everything from diesel to gasoline and jet fuel could surge. By contrast, he noted, the stock market has not yet recognized that risk. He warned, however, that "within six weeks, the narrative, outlook and investment behavior in the stock market will change completely."
Raphael Touin, head of capital markets strategy at Tikehau Capital, also said the stock market's repeated record highs are incompatible with the economic shock from a tight credit market, high interest rates and higher oil prices.
"There are enough reasons to be uneasy about this trend in the short term," Touin said, adding that it is time for the market rally to hit a ceiling and pause.
A survey released that day by BofA also confirmed that a market correction is near. The survey, which targets fund managers, has significant market influence.
In the survey, the increase in fund managers' equity allocations was the largest on record. Over the past month, fund managers' net equity exposure rose by 13 percentage points to 50%, the highest level in more than four years. Strong earnings surprises at companies were behind the shift into stocks.
By contrast, 44% of fund managers said they were reducing bond allocations. That was the highest level since June 2022, or nearly four years.
Given these portfolio allocations, BofA said "profit-taking will emerge" in early June, adding that the intensity of selling in the stock market will depend on the selling pressure in the bond market.
Mandy Xu, head of derivatives market intelligence at Cboe Global Markets, said trends in single-stock options resemble the meme-stock bubble of 2021. She expressed concern that surging Treasury yields have not yet curbed extreme bullish positioning in stocks.
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dympna@fnnews.com Song Kyung-jae Reporter