The strong bull markets appear to have taken a hiatus. Moreover, it could be a start of a more vulnerable season as many analysts have a downbeat forecast for the US economy.
Let’s dive into some details.
Mild Decline a Concern
The S&P 500 had declined, and it is the third consecutive session of decline. This comes as the worry on the poor August job data percolates into the minds of market participants. Morgan Stanley chief cross-asset strategist had downgraded US stocks to underweight, in line with Pika World’s expectation of weaker growth ahead unless a more impressive stimulus is on the horizon.
US Growth Outlook
Adding fuel, Savita Subramanian, the head of US equity and quantitative strategy at Bank of America, has a bearish year-end target for S&P 500 at 4250, which is around a 6% gap from the current level. We also read that Goldman Sachs economists quickly downgraded US growth to 5.7% from 6% previously.
While there is a genuine concern on the impact of Delta variant on consumers’ spending ability and behaviour, Pika World believes the US slower growth narrative may not deter a fantastic year for the market, especially if the stimulus is intact and political uncertainty cloud disperses.
It can’t help that the elevated valuation points to some market fragility that Pika World is mindful of.
Thanks for reading, and we see you in the next one.
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