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%.

After the Federal Reserve started its interest rate cut cycle this week, the largest banks on Wall Street have differing views on the speed and extent of the next rate cuts by the Federal Reserve. Until the outlook becomes clear, the financial markets will remain in a tense state.

On Wednesday, the Federal Reserve unexpectedly lowered its benchmark interest rate by 50 basis points. Several hours later, economists adjusted their forecasts, with Goldman Sachs expecting the Fed to cut rates by 25 basis points at each meeting from November to June next year. JPMorgan, which correctly predicted this week's rate cut, still believes there will be another 50 basis point cut in November, but it depends on the labor market conditions.

In the market, traders expect a total rate cut of about 70 basis points by the end of this year and a cut of nearly 200 basis points by September next year. This is more aggressive than the Fed officials' prediction of another 50 basis point rate cut by the end of the year in the latest dot plot.

Here are some views from economists at major Wall Street banks:

Bank of America

Economists and strategists including Aditya Bhave, Mark Cabana, and Alex Cohen wrote that the Fed "will be forced to further cut interest rates," with a 75 basis point cut in the fourth quarter and another 125 basis point cut next year.

Barclays Bank

US economists led by Marc Giannoni wrote in a report that the Fed will continue to cut interest rates by 25 basis points in November and December, followed by three more 25 basis point cuts in 2025. But considering the Fed's 50 basis point cut on Wednesday (which Barclays did not anticipate to this extent), they now believe that the target range for the end of next year will be lowered to 3.50% to 3.75%.

Citigroup

Citi economists Veronica Clark and Andrew Hollenhorst maintain their forecast for another 75 basis point cut this year, with a 50 basis point cut in November and a 25 basis point cut in December. They wrote in a report, "The risks of a faster pace of rate cuts remain balanced." The bank expects several more 25 basis point cuts in 2025, with the final rate ranging from 3% to 3.25%.

Deutsche Bank

Economists led by Matthew Luzzetti continue to believe that the Fed will gradually cut rates by 25 basis points before the March 2025 meeting, and then transition to quarterly rate cuts, ultimately keeping the federal funds rate between 3.25% and 3.5% by the end of next year. They wrote that the signal from the Fed on Wednesday is "a 'policy adjustment' rather than the start of a series of larger rate cuts."

Goldman Sachs

Economists, including Jan Hatzius, wrote in a report that the Fed will choose to cut interest rates by 25 basis points from November to June next year, bringing the final rate to 3.25% to 3.5%. The bank previously expected to cut interest rates at the last two meetings in 2024, and then cut interest rates quarterly in 2024. Whether the Fed will cut interest rates by 50 basis points again in November is a 'hanging' issue that will be decided by the next two employment reports.

jpmorgan

The bank's chief U.S. economist Michael Feroli correctly predicted a 50 basis point rate cut this week and stuck to his view of another 50 basis point rate cut in November. However, he said this would depend on further softening in the labor market.

Morgan Stanley analysts said that Tesla is about to undergo a radical shift from selling cars to generating high-margin software and services businesses.

A team, including economists Seth Carpenter and strategist Matthew Hornbach, stated that officials may choose to 'continuously' cut interest rates by 25 basis points before mid-2025, including two cuts this year and four cuts in the first half of next year.

Dowling Securities

Strategists from Deutsche Bank, including Oscar Munoz and Gennadiy Goldberg, wrote on Thursday that the threshold for the Fed to further cut interest rates by 50 basis points will be higher from now on. They noted: "Looking ahead, the Fed's forward guidance doesn't seem as gentle as implied by this week's rate decision." Deutsche Bank expects two 25 basis point rate cuts this year, followed by a 25 basis point cut at every meeting in 2025.

Wells Fargo & Co

Wells Fargo & Co strategists, including Michael Schumacher and Angelo Manolatos, wrote: "The 2024 easing cycle begins with market uncertainty at historical levels." The bank expects that in the case of a hard landing, the Federal Reserve may ultimately cut rates by as much as 350 basis points in the first year of its rate-cut cycle, and by 150 basis points in the case of a soft landing. The bank stated that in any case, "the Federal Reserve has a lot of room to ease".

Editor / jayden