Quantitative market indicators monitored at Bank of America by a team led by cross-asset and quant strategist Alex Makedon and equity and quant strategist Savita Subramanian confirm that the US economy fell “deeper” into a recession (from a late economic cycle phase) for a second month in a row in February, a report said on Tuesday.

Going back to 1990, similar conditions prevailed seven times, with the downturn lasting an average of 12 months (but varying between six months in 1995-1996 and 19 months during the global financial crisis), BofA said.

Also, “cash IS the option now,” BofA said, adding “we see cash as more attractive than stocks given our expectation of just 2% to 3% S&P 500 total return this year” compared with a 5% cash yield on short-term T-bills and the bank’s economists “still expect a terminal rate of 5.25%-5.5% even after recent developments.”

The best equity investment strategies revolve around those based on companies’ cash flow, the team wrote. These strategies, which emphasize the ratio of free cash flow to enterprise value or price to free cash flow, “underperformed the index in previous downturns, particularly outside of the zero interest rate policy (ZIRP), when cash had little value. These factors remain underowned by active managers and cheap versus history .”

The BofA idea is that stocks that offer free cash flow and dividends represent a “bird in the hand,” while high P/E growth stocks are “buy the dream” ideas. Unfortunately for those counting on a revival of past leaders, “Long duration stocks (‘buy the dream’ growth stocks most sensitive to funding costs) may have more room to wobble,” BofA said.

-Scott Schnipper

Among the 15 stocks in the S&P 500 that hit fresh 52-week lows on Tuesday was 3M, which fell to its lowest point since February 2013. Once known as Minnesota Mining and Manufacturing, 3M is the only stock in the 15 that is also in the Dow Jones Industrial Average.

• Dish Network (DISH), lowest since 2009
• Hasbro (HAS), lowest since March 2020
• VF Corp. (VFC), lowest since 2011
• Hormel (HRL), lowest since 2019
• Devon Energy (DVN), lowest since January 2022
• Centene (CNC), lowest since October 2021
• CVS Health (CVS), lowest since April 2021
• Southwest (LUV), lowest since May 2020
• 3M (MMM), lowest since 2013
• Gen Digital (GEN), lowest since March 2020
• CF Industries (CF), lowest since February 2022
• WestRock (WRK), lowest since August 2020
• Advance Auto Parts (AAP), lowest since May 2020
• Organon (OGN), lowest since spin-off from Merck in June 2021
• Boston Properties (BXP), lowest since 2009

Three S&P 500 stocks hit new 52-week highs on Tuesday:

• Arista Networks (ANET), all-time high back to 2014 IPO
• Cadence Design Systems (CDNS), all-time high dating back to when ECAD went public in 1987
• GE Healthcare Technologies (GEHC), all-time high back to GE spinoff in December 2022

—Scott Schnipper, Christopher Hayes