S&P Global’s Post

There is a good chance that the S&P 500 index will decline 30% to 50% over the next 1 to 3 years.  (The S&P 500 will likely approach 3000.) I’m not making a prediction, because no one – I mean no one – can predict the stock market. But I am saying that a 30% to 50% decline in the S&P 500 index over the next 1 to 3 years is much more likely than usual. The Shiller P/E (10-year P/E) has exceeded 36. And the economic data has been worsening while profit margins have been coming down. These two things historically have been catalysts for the Shiller P/E to decline below 20. It’s best to focus on value and to look globally.

The Dow Jones Industrial Average became the first major U.S. stock index to set a record since the Federal Reserve started raising interest rates. Investors on Wednesday drove the blue-chip index up 512.30 points to 37090.24, after Federal Reserve officials penciled in three interest-rate cuts next year after their December meeting. The benchmark topped its previous closing high of 36799.65 set on Jan. 4, 2022. The 30-stock index has risen for six consecutive weeks and is up 12% this year. In the 488 trading days since the Dow’s last record, worries about inflation, higher interest rates and a potential recession sent stocks tumbling. Wars in Europe and the Middle East added to the uncertainty. The Dow fell more than 8,000 points, or 22%, to its low in September of last year, before making a sharp U-turn. Growing enthusiasm about artificial intelligence and hopes that the Fed’s work to cool the economy is done have sent stocks charging higher again. Investors are now wagering that the central bank can pull off a soft landing, slowing the economy without tipping it into an extended recession. 

Our analysis of S&P 500 earnings transcripts is detecting a shift in management sentiment that may indicate a stall point for the market. This is consistent with our checklist, which suggested stocks were due for consolidation headed into 2Q. Sentiment expressed during earnings calls conference dropped slightly in 1Q but the decline was relatively shallow, slipping 2% from 4Q. The decrease was less drastic than the sharp drop that preceded the 2022 market collapse, implying it may be too early to ascertain if the recent dip could signal more weakness to come in stocks. Quarterly changes in sentiment derived from management discussions on earnings calls have historically coincided with S&P 500 price movements, peaking in 2Q21 shortly before the 2022 bear market and bottoming in 3Q22. In 2021, our management discussion sentiment reading fell more than 7% between 2Q and 3Q before edging up in 4Q, then fell with the equity market throughout 2022. Bloomberg Intelligence Gillian Wolff, CFA

Over the past couple of decades there has been a significant push toward buying a market index like the S&P 500, rather than picking individual stocks in an attempt to outperform the market. This makes sense for a lot of investors who simply want an easy option for buy and hold investing over a long period of time; it has also been a trend that has created a self-fulfilling performance dynamic.

Possible Considerations for Optimism in the board room H2 2024 The management discussion sentiment indicates a potential stalling in narrative consensus due to the lack of forward-moving guidance. My analysis suggests that the pullback in the S&P in 2022 was primarily driven by boardroom consensus around the need to mitigate inflationary risk and adjust prices accordingly. The flagging sentiment in this situation potentially indicates investment uncertainty around the upcoming election cycle. Particularly concerning boardrooms are certain candidates' abrasive attitudes towards NATO and European trading partners. Other concerns may include the forecasting on AI, which is unlike previous technology revolutions due to its revolutionary and unpredictable nature. Given these situations, an economic platform for the next 12 months to mitigate uncertainty may include the following considerations: The primary uncertainty in economic forecasting hinges on removing major geopolitical risks, particularly the ongoing war in Eastern Europe. The economic impact of Russia's oil money, combined with ideological uncertainty, exacerbates this situation. The actual state of Russia is currently nondeterministic. Once troops are ordered to withdraw from the front lines, a new government will need to be installed immediately. Contingency planning for the emergence of no fewer than 13 new countries have been prepared. The logical economic result of this collapse would be decreased commodity input costs, coupled with a new $1.6T Marshall Plan for rebuilding Ukraine, the Balkans, and the Steppe countries. This will result in a post-WWII style boom for NATO country economies, benefiting from high worker productivity and new technologies such as AI Given these eventualities, a roadmap towards an AI-centric view of the economy will likely be based on the Special Committees Studies Project on AI and DARPA-centric projects The alignment of these projects and methods suggests a trend towards cooperative economic integration across all NATO countries. ODNI and NATO projects such as NATO-CCDCOE have already signaled this integration is underway. This should be coupled with an updated TTIP-style partnership focused on AI. These post-Ukraine war agreements would provide a common economic zone with a GDP exceeding $55 Trillion, benefiting from reduced risks in global supply chains. This common vision for a prosperous future could be encapsulated in a motto like “Wealthy Together,” serving as a counterpoint to “America First” or "Trickle Down." As Reagan would say, “Where’s the beef?” That is to say, what fundamentally makes AI-era governance different than before? The secret lies in a common platform for deliberation within the "Fourth Branch of Government," which is responsible for the adjudication of society. This allows us to create virtues alignment with NATO partners for mutual benefit and resolution of common problems such as extremism and economic structures.

Another record high for the Standard & Poor’s (S&P) 500 Index! Last week, the S&P 500 Index hit its 25th record high for 2024. Investor enthusiasm for artificial intelligence helped drive the index to a new high. About 30 percent of the Index is information technology stocks. Read more on this week's market commentary- https://lnkd.in/e_m6_Gpv

U.S. equities were mixed this past week as tech stocks took a breather from their AI-fueled surge and investors assessed a string of economic data, including softer than expected retail sales and housing reports offset by strength in several manufacturing readings. The S&P 500 index notched a new historic high above 5,500 during Thursday's session before retreating from record levels on Friday amid the tech pullback. The S&P 500 ended the week up 0.6% while the Dow Jones gained 1.5% and the tech-heavy Nasdaq Composite was flat on the week. Continue reading our Private Wealth Advisors Weekly Investment Perspectives newsletter for June 25, 2024. https://direc.to/kFjR #privatewealth #privatewealthmanagement #marketupdates #financialmarkets #economynews #bonds #stocks #markets #investingnews #equities

When aiming for robust investment returns, understanding the momentum of market leaders, especially in technology and other growth sectors, is vital. The Bullish Percent Index for the NASDAQ 100 offers an illuminated path. This index shows what percentage of NASDAQ 100 stocks are currently on a bullish trend, according to point and figure charts. A movement above 50% in this index is an affirmation of market strength and often precedes sustained bullish periods. This Bullish Percent Index recently moved back above the 30% level, suggesting that beaten down growth stocks were most likely mounting a short-term upside reversal. With this breadth indicator continuing higher, that means that the biggest stocks in our benchmarks are in favorable trends. Keeping an eye on this index not only helps in affirming bullish signals but also aids in anticipating shifts that might impact a broad scope of investment portfolios.

📉 Market Update: The Dow and S&P 500 are experiencing serious fluctuations recently! Investors are reacting to a mix of earnings reports, economic data, and global news. Stay tuned—this volatility shows how sensitive the market is right now! #StockMarket #Investing #MarketTrends