Will the S&P 500 retest its historical peak?

US financial markets were closed for Thanksgiving (November 27), but S&P 500 futures were flat at midnight, after the index rose 0.69% yesterday, marking its fourth consecutive gain.

Will the S&P 500 retest its historic peak?

Investors appeared pleased with the index's current position, which is only about 1% away from its recent historical peak.

Entering the December holiday season, investors have reason to be optimistic: macro data is converging in favor of a rate cut by the Federal Reserve at its year-end meeting. The CME FedWatch Index, which rarely deviates, currently rates an 85% chance of the Fed cutting rates to 3.5%.

Goldman Sachs summarized this dynamic in a note to clients this morning titled: “Weaker Job Growth and Lower Inflation.”

Supporting the labor market and keeping inflation low are two core goals of the Fed. So if the Fed believes inflation is under control while the labor market is weak, the case for a rate cut is strong.

UBS also predicted this morning that the Fed could “cut rates a couple of times in the next six months.”

This scenario explains why US stocks have risen for four consecutive sessions despite a series of negative news in the technology sector: Nvidia has fallen nearly 6% this month, due to concerns about an AI bubble.

HSBC previously warned that OpenAI - a major Nvidia customer - would need an additional $207 billion to sustain operations through 2030.

Shares in Michael Saylor’s Bitcoin investment firm, MicroStrategy, have fallen 40% this month as the price of the cryptocurrency plunged, threatening its business model. The company is now worth less than the amount of Bitcoin it holds, according to the FT.

Individual investors are ignoring these individual risks, according to JPMorgan, buying a net $5.8 billion worth of stocks this week, compared with $4.3 billion last week.

“Retail investor sentiment swung very quickly, from extremely bearish on Friday to euphoric on Monday – the strongest buying session in five months,” JPMorgan commented.

Another supporting factor is that US businesses have spent $1 trillion on stock buybacks over the past 12 months, according to Morningstar.

Combining all of these factors, it is no surprise that the S&P 500 appears poised to retest its all-time high ahead of the Fed's December 9-10 interest rate meeting.

Source: https://thoibaonganhang.vn/sp-500-co-kiem-dinh-lai-dinh-lich-su-174315.html