S&P 500 · U.S. · Federal Reserve (FED) · Fortune Technology
The stock market is about to suffer a ‘snapback’ and will lose much of this year’s gains as ‘speculation is hitting extreme
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The S&P 500 notched its best quarter since 2020 and is up about 9% so far this year, but it’s mostly downhill from here, according to Bank of America.
Key facts
- But Fed rate hikes now would hit differently, BofA explained, because the S&P 500 is more expensive ahead of a first rate hike than any other cycle, except for the one that ran from 1999 to 2000
- The S&P 500 notched its best quarter since 2020 and is up about 9% so far this year, but it’s mostly downhill from here, according to Bank of America
- In a note on Tuesday, analysts reaffirmed their year-end price target of 7,100 for the broad market index, representing a 5% drop from the week’s closing level
- At the same time, the Federal Reserve is fighting sticky inflation after more than five years of letting it run above its 2% target
Summary
In a note on Tuesday, analysts reaffirmed their year-end price target of 7,100 for the broad market index, representing a 5% drop from the week’s closing level. “Our bear market signposts suggest speculation is hitting extreme levels as high multiple stocks have gapped up demonstrably, an event that has historically preceded a valuation ‘snapback,'” BofA said. The bank added that S&P 500 companies are generating less free cash flow relative to net income compared to historical trends. At the same time, the Federal Reserve is fighting sticky inflation after more than five years of letting it run above its 2% target.