Here’s the big thing holding up the stock market, says Bank of America

Need to Know starts early and is updated until the opening bell, but?sign up here?to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Retail sales and more debt-ceiling talks are the big spotlight for Tuesday, with stock futures indicating some wobbling ahead. There was also some disappointing China data that showed a slowing recovery.

Dipping a toe into how investors are feeling these days is the latest fund manager survey from Bank of America. Strategist Michael Hartnett and team reveal that investor sentiment deteriorated in May to “the most bearish of 2023” as investors lifted cash balances and got a little more negative on growth. They say that is good news — “positioning still contrarian [positive] for Wall Street.”

Worried managers are convinced that risk assets will remain “resilient so long as the [economic] landing is soft.” The below BofA chart shows nearly two-thirds of those surveyed — 63% — see a soft landing as the most likely outcome for the global economy.

And 61% are convinced the Fed has finished hiking, while 43% say perhaps not.

The next chart might explain why the market is taking that Alfred E. Neuman approach to debt-ceiling talks, baffling some on Wall Street, as 71% expect the ceiling will be raised by the so-called X date:

So where are the worries in this teflon market? A bank credit crunch and a global recession are at the top, followed by high inflation that keeps central banks hawkish.

if there is a credit event, most of those surveyed think it will start in the commercial real estate corner.

As for where this market is looking crowded — the past month saw a big rotation out of commodities linked to those growth worries — and into stocks. The emphasis was on tech names, with an overweight that’s the highest since December 2021, alongside a move into eurozone stocks. Investors are most long on growth versus value stocks since July 2020.

No doubt, some out there have been questioning whether technology stocks can keep up the pace — the Nasdaq Composite?COMP,?+0.66%?is still up a whopping 18% so far this year, while the S&P 500?SPX,?+0.30%?is up just over 7%.

For those contrarians out there, the trades would be bullish positions on real estate investment trusts, banks and value stocks, and going the opposite way of the crowd by shorting bonds, technology and growth.

Read:?Why stock-market bulls must beware of ‘bogus bear-market bottoms’

The markets

Stock futures?ES00,?-0.14%?YM00,?-0.24%?NQ00,?0.03%?have drifted lower ahead of retail sales data, with Treasury yields??TMUBMUSD10Y,?3.490%?TMUBMUSD02Y,?3.995%?also moving south, alongside oil prices??CL.1,?0.25%,?the dollar?DXY,?-0.04%,?gold?GC00,?-0.43%?and especially silver?SI00,?-1.03%.?Turkish stocks and the lira??USDTRY,?0.19%?continue to weaken on?election jitters.?China stocks?000300,?-0.52%?SHCOMP,?-0.60%?took a hit after retail sales and industrial production grew, but short of Wall Street hopes and youth unemployment hit a record.

Read:?A potential U.S. debt-ceiling suspension may present an upside risk for dollar, says BNP Paribas

For more market updates plus actionable trade ideas for stocks, options and crypto,?subscribe to?MarketDiem by Investor’s Business Daily.?And for more live updates on markets, check out?MarketWatch’s Live Blog.

Random reads

In Japan,?smile tutoring is in demand?as mask-mandates end.

The moment Green Day’s lead singer?hopped on stage to sing along with a tribute band.

Keep reading today's Need to Know.

Listen to the?Best New Ideas in Money podcast?with MarketWatch reporter Charles Passy and economist Stephanie Kelton.