The S&P 500 is under scrutiny as its gains were not broad-based and were buoyed by a handful of technology stocks.
Many experts pointed out the increased risk of concentration, others warned of an imminent market sell-off.
Here's what 7 top voices said about the benchmark index — and what the future holds for the S&P 500.
US stocks are at a crossroads and Wall Street pundits are divided on whether the market can sustain this year's rally amid recession risks.
Several top analysts have warned of a potential sell-off in the coming months, noting that the year-to-date rise in the S&P 500 index hasn't been broad-based — and was largely due to sizeable gains in a handful of big tech stocks , fueled by the hype surrounding artificial intelligence.
Veteran economist David Rosenberg has warned that the US stock index is already showing signs of a recession as stocks in key sectors linked to the real economy – such as consumer discretionary, transportation and banks – have tumbled.
Here are the latest comments on the S&P 500 from 7 top voices.
Mohamed El-Erian, top economist and Allianz advisor
“Today's price action in the US is another reminder that the stock market's upside this year can still be attributed to a handful of technology stocks. Not only is the Nasdaq outperforming again, but the S&P 500 would be in negative territory were it not for it #Nvidia”, El-Erian said in one tweet on Thursday.
David Rosenberg, veteran economist and founder of Rosenberg Research
“The question always arises: Why isn't the S&P 500 signaling a recession? Answer: It is. Economically sensitive areas are down -33%: transportation, consumer discretionary and banks. Behaving like early 1990-91, 2001 and 2007-09 downturns,” Rosenberg said in a tweet on Thursday.
Liz Ann Sonders, chief investment strategist at Charles Schwab
“As the S&P 500 (blue) has risen over the past few months, the ratio of the consumer discretionary to consumer staples (orange) sectors has not increased as much.” (In a tweetSonders reiterated Rosenberg's point that key stocks linked to the economy have plummeted despite the overall index's gain so far this year, citing a chart of blue and orange lines.
Larry McDonald, Founder of The Bear Traps Report
McDonald warned the S&P 500 could fall nearly 30% by December as falling corporate earnings, slower government spending and banking turmoil pose a risk to stocks.
“Internally, we broke down,” he told Insider's Theron Mohamed last week. “What didn't crash – where I'm wrong – is that the capital was moved from those crash sites to hideouts,” he added.
Manish Jabra, head of US equity strategy at Societe Generale
“The AI boom and hype is strong,” Kabra said in a note, according to Bloomberg. “So much so that without the popular AI stocks, the S&P 500 would have fallen 2% this year.”
Jurrien Timmer, Director of Global Macro at Fidelity Investments
“In this likely twilight of the long, secular bull market that began in 2009, why is the gap between the top 50 stocks of the S&P 500 and the other 450 widening?” Timmer said in a recent tweet.
“Leadership over the last decade has been driven solely by relative returns, so the valuation gap arose not at the peak (like at the peak of the tech bubble in 2000) but during the subsequent decline. As it was.” “In the period 1973-1975, investors are looking for a place to hide, and that place is the tried and tested One Decision stocks,” he added.
John Hussman, American economist
“Our primary measure of market internals remains unfavorable because it is based on the consistency and divergence of market action across thousands of individual stocks, industries, sectors and security types, including debt securities of various credit ratings,” he said. “A market crash is basically risk aversion and encountering a market that doesn't price risk,” Hussman said.
“These conditions may change, but for now we continue to assess the probability of negative 10-12 year S&P 500 total returns with the prospect of interim losses in the -60% range,” he added.
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