S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally: The S&P 500 index has achieved its thirtieth record of the year,
driven by significant gains in major technology stocks.
This comes when Treasury bonds have declined amid a wave of high-quality corporate bond sales and growing optimism about the resilient U.S. economy.

 

Contents

Market Performance

Economic Optimism

Performance of Technology Companies

Impact of Regulations

Raising Expectations

Hedge Fund Caution

Monitoring Federal Reserve Statements

Market Expectations

Focus on Earnings Expectations

Correlation Between Stock Prices and Bond Yields

 

 

 

Market Performance

The index surpassed the 5,470-point level, driven by substantial gains from Tesla and Apple.
The
Nasdaq 100 index rose by 1.2%, nearing the 20,000-point level.
At the same time, Treasury bonds declined amid a wave of sales of high-quality corporate bonds totaling over $21 billion,
led by
Home Depot, ahead of the Wednesday holiday.

 

Economic Optimism

Optimism about the resilient economy and improved corporate earnings has increased stocks by about 15% this year.
Additionally, easing inflation and enthusiasm for artificial intelligence have propelled stocks higher.
James Demmert of Main Street Research believes the
S&P 500 index could reach 6,000 points by the end of the year.

 

Performance of Technology Companies

The index surpassed the 5,470-point level, driven by substantial gains from Tesla and Apple.
The
Nasdaq 100 index rose by 1.2%, nearing the 20,000-point level.
Micron Technology shares rose to a record high, while Broadcom shares jumped more than 5%.

 

 

 

 

Impact of Regulations

Local reports in South Korea indicate that new regulations are scheduled for implementation next month
could force exchanges to reduce the number of tokens available to investors.
This has raised concerns among some traders and contributed to broad market sell-offs.

 

Raising Expectations

Citigroup strategists have raised their expectations for the S&P 500 index 2024 to 5,600 points.
Similarly,
Goldman Sachs Group strategists, led by David Kostin, have boosted their target for the index to 5,600 points.
Julian Emanuel of Evercore has increased his year-end forecast for the index to 6,000 points.

 

Hedge Fund Caution

Hedge funds have reduced their total long and short leverage, which measures their overall market exposure,
by the most since March 2022. This move indicates a more cautious stance by so-called smart money.

 

Monitoring Federal Reserve Statements

Traders are closely watching statements from Federal Reserve officials regarding interest rates.
Philadelphia Federal Reserve Bank President Patrick Harker stated that he sees one interest rate cut as appropriate this year.

 

Market Expectations

With medium-term expectations from Federal Reserve officials calling for one interest rate cut this year,
cash flows into stocks that benefit from lower borrowing costs.
The question now for investors is what the market will do when the Federal Reserve eventually cuts interest rates.

 

Focus on Earnings Expectations

Many stocks are now more sensitive to weak growth conditions.
Morgan Stanley strategists say that some value stocks have
started to focus more on earnings expectations and less on the impact of interest rates.

 

Correlation Between Stock Prices and Bond Yields

The correlation between stock prices and bond yields continues to reverse and is the most negative since 1997.
This suggests the possibility of a significant shift in the inflation regime,
with stock prices and bond yields remaining highly sensitive to inflation trends.

 

S&P 500 Achieves 30th Record of 2024 Amid Megacap Rally