The S&P 500 posted a three week win streak on Friday, though Wall Street’s bull market stalled on Thursday and Friday. The biggest highlight of the week was chipmaker Nvidia becoming the world’s largest publicly listed firm by market capitalization. For the week, the S&P added 0.6%, while the Dow climbed 1.5%. The Nasdaq was flat.
All eyes are on the Fed and its anticipated interest rate cut. While the Fed seems to be stalling until it has all the economic data, it may have to look no further than the newly frugal consumers, who kept spending through the pandemic, and are now pinching pennies. Then there’s the very tight housing market, where high interest rates are keeping people from giving up ultra low mortgages they secured before or during the early days of the pandemic.
The question is how much upside is left in the market before a correction?
Future Wealth’s View
The S&P 500 has notched its 30th record close of 2024, closing out the session on Monday at 5473. In fact, the index is now up a whopping 15% only six months into the year, resulting in an additional $5.5 trillion in market capitalization. There are several factors that have contributed to the returns – rising corporate profits, cooling inflation and an upcoming Fed easing cycle, historically low market volatility, a likely soft landing, and of course – the notable AI rally.
Analysts have begun to up their targets as bullish energy takes over the Street. Evercore ISI is out with a new 6000 call on the S&P 500, up from 4750, while Goldman Sachs and Citi moved their year end goals to 5600, from 5200 and 5100 previously.
But, it is important for investors to stick to fundamentals. Looking at different scenarios to identify what could cause the next correction is of extreme importance. Following the masses and throwing money into the market now after having remained on the sidelines in money market funds all year would be a big mistake. For those who have already reaped the benefits of the strong run in the stock market, it behooves a little bit of extra effort to look at economic, political and global signs that could offer some insight into the situations that could derail this historic runup in the stock market.
Wisdom from my father that keeps echoing in my ears – “Nothing comes easily. You have to work for it.”