Investment Manager Reveals: S&P 500 to Hit Record Highs by Year-End, AI Rally Losing Steam
By Noel Randewich
A recent Multibagger poll of market strategists indicates that the benchmark S&P 500 is projected to trade near current record levels by the end of the year, with a median forecast of 5,600 points. This comes as investors anticipate a U.S. central bank interest rate cut next month, signaling a potential slowdown in the AI rally that has driven significant gains in 2024.
While market experts initially expected the S&P 500 to remain relatively unchanged for the remainder of the year, the index has climbed over 5% since May. The overall surge of around 18% has been fueled by notable gains in tech giants like Nvidia and Microsoft, who are at the forefront of the emerging AI technology sector.
Despite recent volatility in the U.S. stock market, driven by recession fears and large leveraged positions unwinding, fading concerns of an economic downturn have helped boost stocks in the past week. However, investors are becoming increasingly cautious due to the high levels of spending by major tech companies like Google-parent Alphabet, Microsoft, and Meta Platforms on AI infrastructure.
As the market adjusts to the possibility of a GDP slowdown and stretched valuations, the S&P 500 is currently down about 1% from its record high close in July. With projections of further gains in 2024, investors are advised to exercise caution and closely monitor developments in the global economy.
Analysis:
The S&P 500 is expected to reach new heights by the end of the year, driven by the ongoing AI rally and tech sector dominance. While market sentiment remains positive, concerns over stretched valuations and a potential economic slowdown are looming. Investors should stay vigilant and diversify their portfolios to mitigate risks in the ever-changing financial landscape.