Wall Street’s major averages have rallied for most of this week, ending Thursday in positive territory as tech stocks staged a comeback. While that has sparked talk of bulls returning to the market, the rally may be losing steam, with Nasdaq futures sliding early Friday as investors digested a fresh batch of corporate earnings and disappointing results from Snap. Strategists at Goldman Sachs and elsewhere said this week they don’t think this bear market has bottomed yet, amid recession fears and high inflation. Earnings A key factor in determining the bottom is earnings, according to Sharon Bell, senior European equity strategist at Goldman Sachs. “We don’t see this bear market as completely over yet,” she told CNBC’s “Squawk Box Europe” on Tuesday. “I think that we have yet to see earnings estimates come down … the margins are still quite high.” She added that valuations, especially in Europe, “are certainly not at rock bottom levels that you typically see during a bear market, so yes, I think there are risks to the downside.” Bell said the first half of this year had been “pretty good”, with reasonably strong economic growth, and that even with high inflation, companies have managed to pass on some of those extra price increases, she added. “But I think it’s going to be harder to pass through to consumers, and we expect margins to be squeezed,” Bell said. Analysts forecast earnings per share of $226.92 by the end of this year, or one-year growth of 10.05%, and $246 by the end of 2023, or 8.69%, according to FactSet. In a recession scenario, these numbers could look worse. In Europe, earnings fall about 20% to 30% in an average recession, while the median has been about a 14% decline for the S&P 500 in the past eight recessions, according to Bell. She said margins and earnings estimates are set to go down from here. “So yeah, I think it still is [risks] to the downside,” Bell said. “We have a little bit further to go.” Inflation The other factor in identifying whether the bear market has bottomed is peak inflation, according to Goldman. In a June 14 report, Bell noted that headline inflation has peaked above 3% in the U.S. 13 times since 1950—and the S&P 500 has typically fallen in the run-up to those tops, and on average has recovered after the tops.—top rallies benefited from at least one of three factors: a sharp swing in economic growth, little demanding valuations and falling prices,” Bell wrote. So are we close to the top? Bell said Goldman economists predict that U.S. headline inflation will remain at current levels. levels for the next few months before falling in late autumn. In the UK it may peak in October. US inflation rose 9.1% in June from a year ago, above estimates and marking the fastest pace since November 1981. What the Fed does matters Wolfe Research expects this bear market rally to be a short-lived one, saying its bearish base case remains intact. “We primarily attribute the recent rally to investor sentiment (which is a contrarian) hitting extreme lows, setting stocks up for a strong near-term bounce,” it said in a note on Wednesday. In a separate note Tuesday, Wolfe Research analysts said trading is “likely to remain very choppy,” with more bear market rallies in the months ahead. The analysis house does not see shares bottoming out in the medium term until investors get more clarity about future moves from the US central bank. The firm said it believes the Fed has two basic choices: tighten policy sharply and trigger a deep recession that “crushes” inflation, or tighten moderately and cause a milder recession that fails to solve the inflation problem. Most analysts now expect the Fed to raise interest rates by three-quarters this month – not the full percentage point that was highlighted by some last week.