In 2024, the US stock market performed very strongly, and the S&P 500 index repeatedly set new historical highs. Since October 2022, driven by technology stocks, the Nasdaq index has soared by about 50%, and the increase in this round of US stock bull market has exceeded the median of all bull markets since 1957. From the monthly chart, the S&P 500 index has achieved monthly gains in 6 of the 7 months from November last year to now.
Bloomberg surveyed 586 investors from June 17 to June 21, including Wall Street portfolio managers, economists and retail investors. The survey results show that although U.S. stock investors have no plans to sell stocks for the time being, they are increasingly concerned about the high valuation of U.S. stocks.
About half of the respondents said that U.S. stocks will experience a correction of at least 10% in the second half of this year; while another 35% said that U.S. stocks may experience a correction in 2025.
The general cautious mood is also evident in the options market, where traders have been building hedges against potential losses in technology stocks.
There may not be much room for US stocks to rise this year
As the U.S. economy and corporate profits are still growing and there is ample liquidity in the financial system, most respondents believe that U.S. stocks have room for further gains this year, but the gains may not be large.
The median forecast in the survey is for the S&P 500 to close at 5,606 by the end of 2024, which would mean just nearly 3% above Friday’s close. Still, that’s more optimistic than the median forecast of Wall Street strategists, who expect the index to end the year roughly the same as it is now.
Ned Davis Research strategist Ed Clissold and others wrote in a recent report that the current tailwind for U.S. stocks is justified. However, as time goes on, investors will become more skeptical given all the issues facing investors in the second half of the year, including issues such as the Federal Reserve's monetary policy and the U.S. election.
The strategists wrote in a note that they recommend investors “maintain overweight equity positions for now. But be prepared to take more defensive positions, especially in the third quarter.”
AI and economic risks are the most worrying
Artificial intelligence has been a major driver of the stock market's nearly 15% gain this year, but it is also seen as the factor most likely to trigger a sell-off: 31% of respondents are wary of negative risks related to AI.
In addition, investors' concerns about the economy cannot be ignored. About 27% of respondents said that the stock market may fall as the unemployment rate in the United States rises, while nearly a quarter of respondents are worried that the risk of an unexpected rise in US inflation will keep the Federal Reserve on hold for a longer period of time.
The U.S. unemployment rate rose to 4% in May, the highest level since early 2022. Goldman Sachs economists warned that the U.S. job market is at a potential "inflection point" and further weakening demand for workers will affect employment.
This year's bull market in the U.S. stock market was mainly driven by AI giants such as Nvidia and Microsoft. Although the index has set new highs, it is a bit similar to the cryptocurrency circle. BTC is dancing alone, and most of the altcoins are falling instead of rising!
The inscription and AI sectors, which had the fastest growth in the first half of the year, have all gone silent, and leading stocks such as FET have been cut in half in the past half month!
If the Federal Reserve's AI shuts down and consolidates, the AI sector in the cryptocurrency circle will continue to shuffle until the market completes a complete turnover!
You can have chips in your hand, but it is recommended to keep about 70% of your positions and be prepared for opportunities for defensive, plummeting, and collapse-style covering!
