S&P 500 Price Target 33% of JPM clients have high expectations for the S&P 500 index, with the belief that it will reach 5250 by the end of the year 2024, indicating a notable level of optimism regarding the stock market’s future performance. Image: J.P. Morgan
Valuation – S&P 500 Price/Earnings Ratio The S&P 500 P/E multiple is expected to remain above the average level observed since 1990, indicating investors’ willingness to pay more for earnings, possibly due to optimism about future growth. Image: Goldman Sachs Global Investment Research
Cumulative Flows into U.S. Equity Funds U.S. active equity funds face outflows as investors increasingly favor U.S. passive equity funds due to lower fees, potential tax advantages, and skepticism towards active fund managers’ ability to consistently beat the market. Image: Goldman Sachs Global Investment Research
S&P 500 Stocks and Non-S&P 500 Stocks as a % of U.S. Large Cap Funds AUM Despite the abundance of stocks, the lack of interest in investing beyond the “Magnificent Seven” creates bias, leading to excessive attention and favoritism that may undervalue or neglect other investment opportunities. Image: BofA US Equity & Quant Strategy
S&P 500 Correction Instead of reflecting optimism about economic growth, the rally in the S&P 500 can be seen as an attempt to recover from the negative impacts of rates volatility and geopolitical shocks. Image: Deutsche Bank Asset Allocation
A Typical 10%+ Selloff in the S&P 500 The speed and magnitude of a rally following a correction can vary. The recent rally in the S&P 500 has been faster than usual, which is indicative of strong market momentum and investor optimism. Image: Deutsche Bank Asset Allocation
Is the Recovery in Equities Sustainable or Likely to Reverse Soon? A significant majority of JPM clients believe that the equity recovery will reverse soon, indicating caution and skepticism towards the sustainability of the current upward trend in equity prices. Image: J.P. Morgan
Valuation – S&P 500 vs. U.S. Treasuries The current high valuation of U.S. stocks compared to Treasuries suggests that investors are willing to pay more for stocks, possibly indicating optimism about future performance. Image: Topdown Charts
S&P 500 and 12-Month Rate of Change in Margin Debt The rise in margin debt in June and July can be seen as a bullish signal for U.S. equities, indicating increased optimism and risk appetite among investors. Image: BofA Global Research Click the Image to Enlarge
PMI vs. Equity Risk Premium The divergence between the ISM PMI and the equity risk premium is significant. Image: Morgan Stanley Research