FX168 Financial News (North America) News UBS said that last month's fears in the stock market have subsided, and the current rebound is the beginning of a broad summer rebound.
According to a research report published by UBS on Tuesday (May 14), the S&P 500 could reach the company's expectations of 5,500 points by the end of this year. This represents an increase of more than 5% over current levels. #2024投资策略 #
This statement didn't seem viable in April, when the benchmark index fell 4.5% from peak to bottom. The sharp impact of inflation data has left the market in trouble, which has heightened concerns that interest rate hikes are back on the agenda.
“But the early weeks of May have allayed some concerns. 'Golden' macro data so far: wage growth continues to show signs of weakness, which is positive for inflation, while the overall economy seems to be still on a stable footing,” wrote Solita Marcelli, chief information officer for the Americas at UBS Global Wealth Management.
Marcelli pointed out that one of the four factors that the environment will continue to support the stock market this year is the expectation of further deflation.
However, the April Producer Price Index (PPI) already challenged that outlook, as Tuesday's inflation data surpassed expectations. At the same time, however, the March data was lowered to allay some concerns.
Second, slowing price growth will make the prospects for interest rate hikes increasingly unrealistic, thereby boosting the stock market. Although many on Wall Street still think that interest rates will not be cut this year, the futures market betting policy shift will begin in September.
Third, the stock market will continue to rise as profit growth expands. Marcelli added: “The first quarter earnings season was positive, with over 75% of companies exceeding expectations so far, supporting our view of a 9% increase in earnings this year. ”
Finally, the report said that even if gains expand, continued investment in artificial intelligence will continue to drive the upward momentum.
Although utility companies have been among the top three performing industries in the past 30 days, even so, the artificial intelligence hype has fueled this trend. After all, 30% of the industry faces electricity demand, and the development of technology has greatly boosted the demand for electricity.
Marcelli wrote, “We expect AI spending to remain strong, and we expect terminal markets such as PCs and smartphones to bottom out.” He pointed out that moving to a cheaper segment did not offset the impact: “Tech companies' earnings were the strongest so far this quarter. In the first quarter reporting season, the industry corrected faster than other sectors in the market.”
Marcelli added that this is not only unique to the Magnificent 7 (Magnificent 7) large-cap stocks. Excluding companies such as Microsoft, Nvidia, and Apple, technology companies' profit expectations have risen 7% since March.