Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
With the rebound of the stock market, investors have re-bought large technology stocks.
On August 5th, when $NASDAQ 100 Index (.NDX.US)$the stock plummeted more than 5% within seconds of opening, confirming people's concerns about the burst of the technology bubble. Only two weeks later and after several rounds of bullish data, almost all concerns have been quickly put aside. The fact proves that this is the most serious intraday sell-off of technology stocks since 2022. In the eyes of investors, this is a reset that eliminates some of the bubbles in valuation—they have re-entered.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, said: "The August sell-off is the closest buying opportunity we've seen for tech stocks in a year. In an environment of slowing economic growth, large tech companies provide investors with an opportunity to invest in companies that not only have strong growth but are also more insulated from the economic backdrop."
Since then, with data showing that the US economy continues to expand and inflation is easing, the stock market has seen a sharp rebound, reigniting speculation of a soft landing, which is the main driver of this year's stock market rally. The Nasdaq 100 index has risen in the past seven trading days, achieving the largest weekly gain since November last year, and returning to the record high set on July 10th.
Leading the rebound this round is exactly those heavyweight stocks that dragged down the stock market. $NVIDIA (NVDA.US)$It has rebounded about 26% from this month's low point, with a market cap adding over 600 billion US dollars. $Apple (AAPL.US)$ Rising for eight consecutive days, it is only 4% away from the historical record. The index of seven large technology giants has risen more than 10%.
This does not mean that concerns about the long-term prospects of the industry have disappeared. However, some concerns that triggered the stock market sell-off, such as the increasing difficulty of proving that the high valuation is reasonable, and people's concerns that the Federal Reserve will need to shift to a recession-fighting mode again, have almost been thrown aside.
Robert Stimpson, co-CIO and portfolio manager at Oak Associates, said: "Given the market position of large tech stocks, exposure to artificial intelligence, strong financial resources and strong earnings, they deserve a valuation premium. We believe that technology has both offensive and defensive characteristics."
This rebound has received support from all sides. Data from Goldman Sachs' bulk brokerage subsidiary shows that hedge funds have taken the opportunity of last week's stock market plunge to buy large quantities of technology stocks and other sectors such as communications services and basic consumer goods. Corporations themselves are also active buyers, and Goldman Sachs' repurchase department reported record orders from enterprises. Data from Vanda Research shows that retail buyers have also flocked in, setting a new record of net purchases in the past 12 months.
Of course, the macro background changes quickly. The weak employment data is now covered by the surge in retail sales, and it may turn in another direction. But these companies are still creating huge profits. Although the profit growth of technology giants is slowing down, it is still huge measured by traditional standards, which allows them to continue to invest heavily in artificial intelligence. As four of the top five American technology companies— $Microsoft (MSFT.US)$and$Alphabet-A (GOOGL.US)$N/A.$Amazon (AMZN.US)$and Apple—have already released their financial reports, the group's profit growth in the quarter to June is expected to reach 35%, while $S&P 500 Index (.SPX.US)$has grown by 13%.
These profit-driven investments are a good sign for chip manufacturer Nvidia, which has always been the biggest beneficiary of the construction of artificial intelligence. Nvidia is expected to release its financial report on August 28th, and investors will closely watch CEO Huang Renxun's views on the future.
While Nvidia is expected to continue to receive huge returns, it is currently unclear whether these companies will make major breakthroughs in artificial intelligence. Although the stock market has rebounded recently, these doubts may continue to haunt the stock market. Saglimbene of Ameriprise said: "Buying large tech companies all at once without a clear investment payback period for artificial intelligence investments will make people more uneasy. This situation may continue for the next few quarters."
Editor / jayden