- A group of analysts from JPMorgan’s trading desk say a new record high for S&P 500 “feels inevitable.”
- A technical correction is unlikely because of the large amount of money that’s been waiting.
- Index should reach a new high thanks to strong economic growth, and rising earnings.
The S&P 500 has already had a blistering first half of 2023, and there’s At this point, there is every reason to believe that a new record-high might be almost guaranteed..
In a note sent to clients on Tuesday, Andrew Tyler, the head of US Market Intelligence at the bank, said that positive news about growth and inflation would likely keep stocks rising.
As we move into August, there is a feeling that the market has become more bullish. There is also a feeling of consensus for a pullback to resume the upward trend.
The S&P 500 closed at 4,576.73 on Tuesday, less than 5% shy of its record closing level of 4,796.56 reached in January 2022.
Analysts said that despite recent capitulations in equity markets as investors fear the Federal Reserve could break something in the economy there are still reasons to be bullish.
The trading group said that money was waiting to be invested in US stocks or other areas. This is why a technical correction or worse seems unlikely. Macro data does not usually deteriorate as rapidly as this scenario would suggest.
For example, if you have more data to support economic growth or better earnings, this should help push your stocks higher.
Inflation in July fell to 3%, which is higher than the central banking goal of 2%, but lower than last year’s peak of 9.1%, causing investors to rush to the stock market.
Analysts say that in order for stocks to rise even further, there would have to be an improvement in GDP growth as well as earnings growth. This is without the need for any additional Fed rate hikes. The fact earnings can beat expectations in an high-rate environment creates the argument for elevated valuations, in their view, and that could push the S&P 500 well beyond record highs.
Take out the ” [all time high]Analysts added that “it just feels like timing is the issue.” “That said… touching 5k shouldn’t be a shock, especially if it is a reacceleration of the macro/econ cycle higher than just a restart that shows choppy trending data lower.
Analysts say that while August and September tend to be weaker months, any short-term reversal should be followed by a rally in the stock market.
The Fed may be unable to raise interest rates any higher than the current 5.25%-5.5% rate range if there are more signs that the economy is cooling. This could support the widely hailed soft landing scenario, that was unthinkable only a few month ago.
Anastasia Amoroso, iCapital’s chief investment strategist, told Insider on Monday that all-time highs indeed look possible for the S&P 500 in the near-term. According to her, a scenario with no recession is positive for stocks.
Amoroso stated that earnings could surprise on the upside as long as there is a slow, but steady growth in the economy. The Fed’s decision to slow or stop its rate hikes will support multiples. Steady multiples and fulfilled earnings expectations should be enough to justify the S&P 500 at 4,800 or above.”
