The U.S. stock market has turned volatile in recent weeks, partly on recession fears, but also related to the unwinding of large leveraged positions in markets as a result of a sudden, sharp rise in the Japanese yen, used as a funding currency.
Fading recession concerns helped boost stocks last week, marking their biggest weekly gains since November.
“The AI sugar high is fading and the market is coming to grips with a possible slowdown in GDP,” said Synovus Trust portfolio manager Daniel Morgan, warning as well of “little room for error” due to stretched valuations.
The S&P 500 dipped 0.2% on Tuesday ahead of an annual central banking conference at Jackson Hole, Wyoming later this week that could offer clues about the trajectory of interest rate cuts. The index is down about 1% from its record high close on July 16.
Nvidia’s stock has surged 158% in 2024, and analysts expect the chipmaker’s quarterly net income to more than double when it reports its results next week, according to LSEG.
The S&P 500 will trade at 5,900 points by the end of next year, a 5.2% gain from Monday’s close, the survey showed.
Stock strategists struggle to accurately predict the market, but their forecasts offer a glimpse of sentiment across Wall Street and Reuters poll medians often correctly predict the direction of trading.
A neck-and-neck race between former President Donald Trump and Vice President Kamala Harris means additional uncertainty for investors ahead of the Nov. 5 U.S. presidential election.
As well, turmoil in the Middle East and uncertainty over how many interest rate cuts the Fed will deliver make it particularly difficult right now to forecast the stock market, said Chase Investment Counsel President Peter Tuz.
Asked by Reuters, over half of poll respondents said a stock market correction of at least 10% is likely by the end of September. More than half predicted corporate earnings would beat expectations through the end of 2024.
While the AI rally has benefited the U.S. stock market’s most valuable companies, much of the market has lagged.
Following this year’s rally, the S&P 500 is trading at 21 times expected earnings, compared to a 10-year average of 18, according to LSEG.
(Other stories from the Reuters Q3 global stock markets poll package)
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Reporting by Noel Randewich; additional reporting by Caroline Valetkevitch, Chuck Mikolajczak, Stephen Culp, Sinead Carew and Chibuike Oguh in New York; Polling by Sarupya Ganguly and Purujit Arun; Editing by Louise Heavens
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