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24/06/24
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Bloomberg’s Survey Suggests Overvalued S&P 500
Bloomberg’s survey involving news readers shows that the S&P 500 is more overvalued than U.S. credit or gold, according to 52 percent of respondents. Forty-nine percent of respondents expect a ten percent retracement in the S&P 500 this year, while 55 percent expect to maintain similar S&P 500 exposure over the coming month.
Regarding the major reason for the expected retracement, 31 percent of the respondents believe it is a negative surprise on the artificial intelligence front, while 27 percent think it is a rise in unemployment and 24 percent point to inflation. Inflation and labor conditions may compel the Fed to keep rates higher for longer.
The respondents believe that value stocks are the biggest bargain in the United States stock market, and then small stocks and the equal-weight S&P 500. They consider the broadening S&P 500 rally and shortening the USD as trades that may prove wrong by the end of 2024.
Forecasts from Wall Street have been aligned for the S&P 500 in recent times, while Citi revised its target up to 5,600 for the end of this year. The forecast extends into next year, anticipating 5,700 by mid-2025 and 5,800 by the end of 2025.
The impact of mega-cap growth stocks as well as several market risks were considered by Citi’s strategy team, setting a full-year earnings forecast at $250 for 2024. Goldman Sachs revised its S&P 500 price target to 5,600, based on solid earnings growth from major tech firms, which include Nvidia, Amazon, Microsoft, Google, and Meta Platforms.
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