On Monday, Morgan Stanley strategists led by Michael Wilson reiterated their bullish stance on US equities, citing strong earnings growth. According to their scenario, the S&P 500 will reach 7,200 points by the middle of next year.
On Monday, Jamie Dimon, the head of JPMorgan, stated that the risks associated with new US tariffs, markets, and central banks of other countries are being misjudged. In his view, the risks of rising inflation and even stagflation are not reflected in stock prices.
Despite the recent easing of trade tensions, investors remain skeptical about the persistently record-high valuations of the US stock market. According to Chris Iggo of AXA Investment Managers, the current S&P 500 multiples, which exceed 20 times earnings, appear particularly risky.
As JPMorgan Chase & Co. notes, retail investors bought a net $4.1 billion in American stocks on Monday, reversing a 1% decline in the S&P 500 triggered by Moody's US credit rating downgrade last week.
A thaw in trade tensions between the US and China helped the S&P 500 index to rebound. However, according to Yahoo Finance, several Wall Street strategists are urging investors to be cautious as they consider the current rally to be overvalued.
Following Moody's downgrade of the US government's credit rating, there was a significant market reaction. The yield on long-term American Treasury bonds briefly surged past the critical 5% threshold, while stock prices and the dollar declined.
The US stock market fell on the news that Moody's downgraded the country's credit rating. The rating dropped from the highest level of AAA to AA1 due to rising government debt and a higher interest burden. This is how the organization explained its decision.
A decrease of the indicator value may contribute to the fall in quotes of S&P 500.
According to Bloomberg, traders are no longer hedging against a potential drop in the S&P 500 index, betting instead on a rapid recovery after last month's slump. The agency notes that “greed has gripped the markets”, replacing previous fears.
The implementation of tariffs from US administration on April 2 worsen the situation on financial markets and diminished the market price of American stocks by $6 trillion. It happened due to massive dumping of stocks by hedge funds, Wall Street “smart money”, and other professional investors.
This week, Fidelity International's fund manager said she increased the share of US stocks in her portfolio, citing market optimism following the US-China trade truce.
The S&P 500 Index (Standard & Poor's 500) is one of the key indicators of the US stock market and overall economic health of the United States. It represents the stock performance of the country's leading corporations. This stock market instrument reflects the dynamics of different sectors and serves as a universal benchmark for investors and analysts.
Major factors that determine the value of S&P 500:
The S&P 500 is often seen as a gauge of US financial health. Its growth suggests positive expectations and investor confidence, while a decrease may signal risks of recession or crisis.
This index is used for both long-term investing and short-term trading. To forecast its movement accurately, it's necessary to take into account macroeconomic data, corporate reporting, and the overall state of the stock market.
