Source: Wall Street See
The US stock market has hit another new high, with the main contribution from the technology giants known as the "Seven Sisters". However, Goldman Sachs pointed out that although the US stock market has been continuously hitting new highs, the economic growth expectations of the USA are too optimistic, with the most easily overlooked being the financial deterioration of middle- and lower-end consumers and the decline in consumption.
The US stock market hit a record high again.
Driven by AI and large tech stocks, $S&P 500 Index (.SPX.US)$It rose 1.6% last week and hit a record new high again. And the main contributor is the technology giant "US Seven Sisters," such as $Apple (AAPL.US)$which rose by nearly 10% last week.
However, nonferrous metals and banking cyclical stocks have all fallen back, causing investors to complain: Investors who did not buy the "Seven Sisters" felt perfect and have no sense of participation.
Goldman Sachs pointed out that the S&P 500 index has returned to the "overbought" area. From the perspective of liquidity, investors continue to have a strong demand for large tech stocks like the "Seven Sisters," and the net inflow this week reached 8.5 billion US dollars. At the same time, the weakness of the small-cap stock index Russell 2000 has continued to raise concerns about the slowdown of economic growth among investors.
Goldman Sachs pointed out that although the US stock market has been at a record high, the expectations for US economic growth are too optimistic. The easiest thing to overlook is the deterioration of the financial situation and the decline in consumption of lower- and middle-income consumers. Although inflation is easing, price levels are still challenging for consumers. The main reasons are as follows:
1. The increased tax withholding and capital gains tax at the beginning of the year increased the actual tax rate, resulting in a decrease in disposable income for consumers;
2. The actual refund amount has decreased;
3. The unexpected increase in first-quarter inflation has increased spending and may have lowered consumer confidence.
Goldman Sachs consumer analyst Kate McShane believes that middle-income consumers face the greatest pressure relative to other population groups. She expects their disposable cash flow to grow by 1.6% due to higher financial expenses and less appreciation of housing, which has inhibited the inflow of cash for this group.
The decline in consumer spending power and willingness is also transmitted to the US stock market. Especially, many large US consumer companies mentioned the impact of the decline in consumer activity in the first-quarter financial reports, such as mcdonald's (MCD.US) Q1 EPS was lower than expected because consumers became more demanding in spending. And coca-cola (KO.US) also found that low-income consumers are turning to more cost-effective consumption choices.
Consumer spending is not increasing, but income is slowing down. This is not good news for retail companies.
Editor/tolk