HSBC issued a warning to investors cheering the rally: This market comeback has no legs. "We think this is rather wishful thinking," Max Kettner, chief multi-asset strategist at HSBC Bank, said in a note to clients. "For this 'buy anything' rally to continue, we'd need to see further repricing of rate hike expectations and another sharp drop in real yields." The Federal Reserve's commitment to bring down inflation as well as easing recession fears have sparked a relief rally in the market. The S & P 500 is now up more than 13% from its recent low on June 16. The benchmark index is also coming off its best month since November 2020, gaining more than 9% in July. Bond prices have also followed stocks higher. The benchmark 10-year Treasury was trading near 2.7% Thursday, down from nearly 3.5% in mid-June. "It was falling central bank rate hike expectations that lifted pretty much all boats," Kettner said. "From a fundamental perspective, we'd need to see a stabilisation of growth indicators pretty soon. And then of course, all the tightening and growth slowdown we've seen so far would need to prove enough to make inflation fall dramatically." HSBC downgraded equities to "maximum underweight" along with high-yield credit and sovereign debt. Widely followed Mike Wilson from Morgan Stanley also called this rally unsustainable as corporate earnings are beginning to deteriorating. Wilson, one of Wall Street's biggest bears, said the prior decline in stocks didn't fully reflect the risk of a recession as earnings typically fall much more drastically in a downturn. —CNBC's Michael Bloom contributed to this report.