Despite a turbulent political landscape and economic uncertainties, US stocks have shown remarkable resilience and growth. The S&P 500 Index has enjoyed its third consecutive week of gains, soaring by 5.1% in the third quarter – its best performance since 1997. This robust growth has pushed the index’s market capitalization above the $50 trillion mark for the first time, a significant milestone. Notably, this surge wasn’t solely driven by Big Tech giants, as the Nasdaq 100 Index saw a more modest 1.7% increase for the quarter. The equal-weight version of the S&P 500, however, surged nearly 9%, highlighting a broader market rally.
Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, remains bullish on stocks, forecasting the S&P 500 to reach 6,000 by the end of the year, representing a 4.6% increase from Friday’s close. This optimistic outlook is supported by trading data from Goldman Sachs Group Inc., which reveals a threefold increase in bets on information technology stocks rising than falling.
However, concerns linger. The Federal Reserve is navigating a delicate balancing act, aiming for a ‘soft landing’ following a period of rapid inflation and aggressive interest rate hikes. Despite efforts to stabilize the economy, the likelihood of a recession within the next 12 months remains high, according to the New York Fed. Nonetheless, the consensus forecast points towards steady economic growth. The Atlanta Fed’s GDPNow model predicts real gross domestic product to increase at a 3.1% annual rate in the third quarter, up from 3% in the second quarter.
The coming weeks will be crucial for the stock market, as investors anxiously await key economic indicators. These include crucial jobs reports, a wave of earnings announcements from major US companies, the US presidential election on November 5th, and the Fed’s next interest-rate decision on November 7th. These events will undoubtedly shape the market’s trajectory and investor sentiment in the near term.
