Wall Street is on track to finish the first half of 2023 much better than many expected. With a week left in the second quarter, all three major indicators are in plus for the year. Together, the Dow Jones returned 1 percent, while the Standard & Poor’s added 13 percent.
The clear winner is the high-tech Nasdaq, which is up about 30 percent so far this year. CNBC writes that the rally is a result of excitement around artificial intelligence, as well as growing optimism that the central bank is nearing the end of raising interest rates.
After rising nearly every day for the past two months, all three indexes broke their winning streak on Friday. It must be a lot of the reason that Jerome Powell gave investors who thought we were done with raising interest rates, a cold bath. In addition, there was an unexpected increase in interest rates from the Bank of England. Recently, many well-known strategists have come out and said that the stock market seems to be overvalued.
If October is the bottom of this cycle, it will be the highest multiple of a bottom we’ve seen in the past 60 years, UBS strategist Solita Marcelli wrote in a note to clients.
important inflation figures
Many investors will be watching the inflation numbers closely going forward as they will be a good indicator of where interest rates will go next.
Next week, new inflation figures will arrive from the US and core inflation, the US central bank’s preferred inflation indicator, is expected to have risen 0.3 percent in May after an increase of 0.4 percent in the previous month. .
On a yearly basis, inflation is expected to have increased by 4.6 percent. This would still be well above the federal inflation target of 2 percent.
Terry Sandvin of Bank of America Wealth Management reportedly told CNBC that we see inflation slowing and that they think it will continue to fall. He notes that the inflation figures to be released on Friday will be the next to influence the mood in the markets, but you should also pay close attention to the jobs numbers and other important indicators that will be released later in July.
Standard & Poor’s over 4,500?
If you ignore the past week, US indices are enjoying strong momentum and Stephen Stemmer, a strategist at Bank of America, believes that the S&P 500 could rise above 4,500 points. He notes that signs of rising FOMO (fear of missing out) have been seen and that this could drag the indicators further up.
On the other hand, BTIG’s Jonathan Krinsky warned this week that there are a lot of risks associated with technology stocks in particular and that they could fall as quickly as they have risen in recent months.
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