### Summary
The S&P 500 returns over the last one, five, and ten years are only slightly above their long-term averages, suggesting that the stock market is not unanchored from reality. However, the performance of long-term US Treasuries has been poor, with even 10-year Treasuries resulting in losses over the last five years. Slower economic growth may be on the horizon, but it remains uncertain whether it will be enough to bring down inflation rates.
### Facts
- The S&P 500 returns over the last one, five, and ten years are only slightly above their long-term averages.
- The performance of long-term US Treasuries has been weak, resulting in losses for investors even after accounting for coupon payments.
- Slower economic growth may be on the horizon, but it remains uncertain if it will bring down inflation rates.
- The nature of the stock market rally suggests that investors are still searching for buying opportunities rather than thinking about selling.
- Energy, industrials, and financials have become favored sectors, while technology stocks have started to decline.
- The Chinese economy is struggling, with retail sales and industrial production growth slowing down.
- The Federal Reserve has expressed concerns about inflation but also noted downside risks to the economy.
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The S&P 500 has fallen nearly 5% in August, and opinions on whether stocks will rebound are divided among Wall Street firms and market commentators, with some, like Goldman Sachs and Fundstrat, remaining optimistic while others, including Michael Burry and David Rosenberg, are bearish.
The Dow and S&P 500 ended slightly lower due to concerns about the Federal Reserve keeping interest rates higher for longer, while the Nasdaq finished barely in the green; the financial sector fell 0.9%, dragged down by an S&P downgrade of credit ratings of regional U.S. lenders, and investors are awaiting clarity on the rate outlook from Fed Chair Jerome Powell.
The S&P 500 has recovered 65% of last year's bear-market drop, but when adjusted for inflation it is only about 45%, highlighting the diminished buying power and implying implications for the economy and future Federal Reserve policy.
Wharton professor Jeremy Siegel predicts that the stock market will continue to rise into the end of the year, with the S&P 500 potentially surging 25% and gaining an additional 9% if the Federal Reserve acknowledges falling inflation and refrains from further interest rate hikes.
The S&P 500 could experience significant gains in the coming months following the end of the current rate hike cycle by the Federal Reserve, with historical data showing positive returns after previous cycles and strong economic indicators supporting this trend. Investors are advised to consider investing in an S&P 500 index fund or industry-leading stocks like Amazon.
The fundamentals and technicals support a demographically driven bull market in stocks until 2034, but potential risks include inflation, interest rate-induced debt crisis, and refinancing problems, which could lead to a drop in the stock market. Comparing the S&P 500's score in August 2023 to historical patterns, the market seems confident and not indicating an imminent debt crisis or severe recession. Credit spreads also appear tame compared to previous crisis periods. However, the article notes the possibility of abrupt changes in the market and encourages openness to a wide range of outcomes.
Despite economic challenges, the S&P 500 is expected to continue its strong growth, potentially increasing by as much as 11% as the summer season ends, driven by companies like Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta, according to Morgan Stanley analyst Andrew Slimmon.
The S&P 500 fell while the Nasdaq rose after U.S. inflation data met expectations, suggesting the Federal Reserve may pause its monetary tightening, while Salesforce shares climbed on a positive revenue forecast.
The S&P 500 had a good week, rising 2.5% and coming 1.6% below the 2023 high-water mark set in July; however, there is a possibility of a recession if the Fed keeps rates high for longer than necessary.
The US economy is predicted to enter a recession by spring, leading to a 25% or more crash in the S&P 500, according to economist David Rosenberg, who warns that American consumers are nearing their spending limits and rising home prices reflect a weak housing market.
Investors are becoming increasingly nervous due to concerns about the Fed potentially increasing interest rates, as well as rising 10-year interest rates and the VIX, which may put pressure on stocks; however, there are also positive factors emerging, such as improving S&P 500 profit estimates and a shift away from data dependence by Fed officials, which suggests a better finish to September is probable.
The US economy is facing a looming recession, with weakness in certain sectors, but investors should not expect a significant number of interest-rate cuts next year, according to Liz Ann Sonders, the chief investment strategist at Charles Schwab. She points out that leading indicators have severely deteriorated, indicating trouble ahead, and predicts a full-blown recession as the most likely outcome. Despite this, the stock market has been defying rate increases and performing well.
Economist Gary Shilling predicts that the S&P 500 will decline by around 40% during this market cycle, citing recession indicators such as the yield curve and The Conference Board's Leading Economic Index. He believes that a US recession may already be underway due to the Federal Reserve's focus on reducing inflation, and high valuations in the stock market increase the likelihood of a significant drop.
Bank of America predicts that the S&P 500 could surge over 25% within the next year based on a bullish indicator, with low long-term profit growth expectations among analysts signaling potential gains.
Wall Street finished the week with a decline in stocks, as the S&P 500 posted its second consecutive losing week, with technology and retail sectors contributing to the slide, while investors await the upcoming Federal Reserve interest rate policy meeting.
Markets on Wall Street are expected to open with losses after the Federal Reserve suggests it may not cut interest rates next year by as much as previously thought, leading to a decline in futures for the S&P 500 and Dow Jones Industrial Average; uncertainty surrounding inflationary indicators and high rates is a major concern for traders moving forward.
The S&P 500 is expected to rise 13% by June 2024, according to a historical correlation between first-half returns and subsequent 12-month gains, indicating a potentially bullish outlook for the stock market.
Bitcoin and the S&P 500 are likely to end the third quarter lower due to the strong case for owning bonds over stocks, with government bonds offering a higher return, making them more attractive than risk assets like cryptocurrencies.
The S&P 500 typically experiences a decline before US government shutdowns, but tends to rebound and gain in the following months; however, the current shutdown may add to short-term market volatility amidst already challenging economic conditions.
Investors are concerned about the possibility of a US interest rate hike and a government shutdown, which could impact the US credit rating and push the world's top economy into recession.
The Federal Reserve's decision to maintain high interest rates has caused concern in the financial markets, with the S&P 500 and Bitcoin potentially underperforming; however, there appears to be a decoupling between the S&P 500 and Bitcoin, which could be attributed to factors such as regulatory concerns and the anticipation of a spot Bitcoin ETF introduction. This decoupling may favor Bitcoin.
Investors are concerned about a potential showdown for the S&P 500 as stock market commentator, Heisenberg, shares a chart indicating bearish patterns and a major trend line off the October lows, suggesting a sharp drop in the index. Rising bond yields, climbing oil prices, and fears of slowing consumer spending are also factors contributing to investor unease.
The S&P 500 fell as investors reacted to an inflation report and adjusted their portfolios on the last day of a weak third quarter for stocks, with the benchmark index also on track to post its biggest monthly percentage drop of the year.
The S&P 500 has been hit hard by the September Effect, but investors should remain optimistic as history suggests the market will rebound, and there are compelling buying opportunities in certain growth stocks like Block and SolarEdge with upside potential of 93% and 127% respectively.
The Federal Reserve's aggressive interest rate hikes have resulted in a decline in the profitability of S&P 500 companies, with the return on equity ratio falling this year, and the trend could worsen if interest rates remain high.
The S&P 500 has entered a bull market, marking a rise of 20% or more from its recent low, with hopes that the economy will continue to defy predictions of a recession caused by high inflation and aggressive measures taken by the Federal Reserve. However, concerns remain as the Fed is expected to continue hiking interest rates and the gains in the market have mainly been driven by a small group of stocks, raising sustainability concerns. Bull markets typically last around 5 years with gains of 177.8%, while the previous bull market lasted 21 months and the current one began on Oct. 13, 2022. The recent bear market ended on Oct. 12, 2022, with a duration of nine months and a drop of 25.4%.
The S&P 500 broke a four-week losing streak, but market breadth was poor and the small cap Russell 2000 fell into the red for the year, suggesting that higher interest rates are taking a toll on the economy and increasing the chances of a recession.
The S&P 500 experienced a 7.83% drawdown, but current volatility expectations are lower than past periods of similar declines, suggesting that the market is experiencing a normal correction rather than a bear-market-like drawdown.
Fundstrat's Mark Newton predicts that the S&P 500 will drop to 4,200 before recovering, presenting a buying opportunity for investors as the Fed is likely done hiking interest rates and market volatility is expected to be short-lived.
The U.S. stock market is currently trading at a discount to fair value, and Morningstar expects rates to come down faster due to optimism on inflation; strong growth is projected in Q3, but the economy may slow down in Q4, and inflation is expected to fall in 2023 and reach the Fed's 2% target in 2024. The report also provides outlooks for various sectors, including technology, energy, and utilities, and highlights some top stock picks. The fixed-income outlook suggests that while interest rates may rise in the short term, rates are expected to come down over time, making it a good time for longer-term fixed-income investments. The corporate bond market has outperformed this year, and although bankruptcies and downgrades may increase, investors are still being adequately compensated for the risks.
Investors are cautious ahead of the third-quarter earnings season, as a decline is expected for the fourth consecutive quarter, with a 0.4% year-over-year decline predicted for S&P 500 companies, which could negatively impact stock prices if expectations are not met.
The S&P 500 has seen a strong bounce off its previous low, but it has yet to fully recover, and the recent rise in Treasury yields and geopolitical conflicts contribute to a cautious outlook on the market's future performance.
Investors are hopeful that the year-long decline in profits for Corporate America will come to an end with a projected rebound in the final quarter, but concerns about the fragile economy, high interest rates, and wary consumers suggest that any relief for stocks may be short-lived.
Investors are growing concerned that the S&P 500 in 2023 is displaying similarities to the pattern preceding the 1987 crash, such as a strong start to the year, a sell-off in the third quarter, rising interest rates, underperformance by rate-sensitive sectors, and a strong dollar; however, experts believe there are enough differences between the two periods to suggest that a crash-like event is unlikely.
Despite ongoing macro headwinds, S&P 500 companies are beating earning expectations and signals suggest that corporate America's earnings recession may be over, however, the macro picture and uncertainties still create choppiness and challenges for companies.
Wall Street bear Michael Wilson maintains his prediction that the S&P 500 will end 2023 at 3,900, citing weak market breadth, waning consumer confidence, and tempered earnings growth expectations as reasons for a potential further drop in stocks.
The S&P 500's record-breaking performance, driven by a handful of technology stocks, is causing concern among economists due to their inflated valuations and the high levels of Treasury debt yields, suggesting an imminent correction in the market.
The S&P 500 is experiencing a volatile and uncertain market, causing many investors to give up, but understanding the nature of the volatility and the current strength of the economy can help align portfolios for future gains, especially with GDP estimated to be at 3.5% - 5.4% for Q3 and PCE Inflation expected to drop to 3.1% moving closer to the Fed's 2% target.
John Hussman, who accurately predicted the 2000 and 2008 market crashes, warns that the S&P 500 could drop by as much as 63% due to high valuations and weak market breadth, which have historically led to significant losses for investors.
Piper Sandler strategist Craig Johnson suggests that the S&P 500 is oversold and has room to rally by 14% this year, despite various headwinds such as high interest rates and geopolitical uncertainty.
Summary: The S&P 500 experienced a 2.4% decline last week, marking a 7.9% decrease from its high-water mark in July 2023, while bitcoin remains down 48% from its peak in October 2021, and solar energy stocks faced a significant setback due to rising interest rates.
The S&P 500 is at risk of a technical breakdown, but oversold extremes and potential rebound indicators suggest that a reversal in stock prices could be imminent, according to Fairlead Strategies' Katie Stockton.
The S&P 500 is at risk of a 5% decline after falling below a key technical level of 4,200 points, according to Bank of America Corp.'s Michael Hartnett.
The S&P 500 could experience a significant rally of 18% by the end of the year, driven by the Federal Reserve potentially ending its rate hike cycle and a strong economy, according to Oppenheimer's chief investment strategist.
The S&P 500 closes in correction territory as weaker-than-expected earnings reports and strong economic data cause volatility in the market.
