The S&P 500 and the Nasdaq moved into uncharted waters at close of business yesterday, 29th June 2021 both claiming new records
New all time highs reached!
The Nasdaq closed at an all time record high of: 14528
The S&P 500 closed at an all time high of: 4292
But are investors finally turning bearish on the S&P 500?
Now that we have completed the first half of the year notching stellar U.S. stock gains – how likely is it that the S&P 500 will continue to charge to new records in the second half of the year?
I have noticed that some analysts suggest the S&P 500 will either be 4150 or 4350 over the shorter term – I think I could even calculate that. I’m guessing there will be bigger swings outside of this range over the next two quarters. Some strategists predict a 10% – 15% drop and retail investors are signalling lower confidence in S&P 500 stocks from here on. I can see a pullback before much more of an upward march.
Will the people who actually buy and sell shares turn more pessimistic on stocks. The top three risks to recently emerge are now inflation, an interest rate hike and a possible error by the Federal Reserve.
If inflation is persistent enough or perceived to be, it could quite easily affect the S&P 500 by as much as 20%, in my opinion. Higher inflation will erode the value of future profits.
Also, if the Fed hike interest rates too early and too quickly, it could damage growth and recently the stocks that are most sensitive to the perceived health of the economy have under performed.
It would appear that the big stock hitters, the usual gang, are dragging the markets up to new records. It wouldn’t take much for that to come crashing down.
It’s pretty frothy out there at the moment.
And the pandemic is still with us.
Don’t push those profits too far.