This is our weekly market update.
Here is the big question. Are U.S. stocks poised to continue their dramatic run, or is a pause ahead? That’s the question investors are asking as the S&P 500 heads into the close of the year with fresh highs possibly coming into view. A softer tone to U.S. economic data this week has fueled rate-cuts bets, pushing Treasury yields down and lifting equity markets. For the week, the S&P 500 added 2.2% while the Nasdaq composite rose 2.4% and the Dow climbed 1.9%.
This extended a rally that has seen the S&P 500 gain over 9% since late October. The index is now up nearly 18% for the year and less than 2% away from its year-high, reached in July. Its record closing level, from January 2022, is some 6% away.
Whether it can reach those levels in coming weeks depends in-part on how convinced investors are that the U.S. economy is on track for a so-called soft landing, where the Fed brings down inflation without badly damaging growth. So far, the economy has proven resilient in the face of tighter monetary policy, though some measures of employment and consumer demand have softened.
Leading global investors expect inflation and interest rates to remain high well into next year and are bracing for more volatile sharemarkets where easy returns will be hard to find.
Top fund managers, company founders and superannuation funds told the Sohn Hearts & Minds event at the Sydney Opera House on Friday that they were looking beyond big name, overpriced Wall Street stocks that would struggle to deliver growth.
Instead, investors willing to gamble on unloved and unpopular stocks would do best, they said. Many investors warn there is a huge insolvency risk lurking in private markets.
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