Amidst the soaring optimism in the financial markets, a pressing question has emerged: “How soon until the S&P 500 tops 6,000?” TheStreet poses this query as asset managers display an unprecedented level of bullishness, raising concerns about a potential market bubble.
The fervor is particularly evident in the prolonged bullish stance on U.S. stocks, with asset managers positioning themselves in a manner that suggests unwavering confidence. The S&P 500, excluding technology stocks, is hitting all-time lows relative to the S&P 500 technology index, signaling a potential disconnect between different sectors.
The dominance of the technology market, reminiscent of the dot-com era, has persisted, but a noteworthy shift is occurring. According to reports, individuals aged 55 and older, who constitute 80% of stock-market ownership in the U.S., are becoming more inclined to sell if the economy faces a downturn. This demographic trend, as highlighted by Rosenberg Research, raises concerns about the stability of the market, especially given the potential impact of a recession.
The dynamics become more complex as companies prioritize share buybacks over capital expenditures and research initiatives. Critics argue that this approach favors insiders while neglecting broader economic activities that contribute to job creation and overall economic strength. The focus on share buybacks could potentially divert resources from essential investments in areas like research and development.
JPM’s analysis adds another layer to the apprehension, revealing that semiconductor inventory levels remain at extreme highs. The looming possibility of destocking in the upcoming quarters might exert pressure on demand, leading to weaker pricing and margins for the sector. This situation introduces additional uncertainties into the market, challenging the sustainability of the current bullish sentiment.
The S&P 500 excluding technology stocks is trading at all-time lows relative to the S&P 500 technology index.
— Global Markets Investor (@GlobalMktObserv) February 12, 2024
Boomers are more likely to sell if the US economy tips into a recession, per BI.
That's a problem, considering that people 55 and older account for 80% of stock-market ownership in the US, according to Rosenberg Research. pic.twitter.com/1vXGuqVjsS
— unusual_whales (@unusual_whales) February 12, 2024
Again, pumping the stock market at expense of the real economy is a bad thing. t.co/E2bx6KW9j4
— RJR Capital (@RJRCapital) February 12, 2024
JPM shows that semiconductor inventory levels remain extreme, and destocking over the coming quarters could put pressure on demand and lead to weaker pricing and margins for the sector. pic.twitter.com/zj1iTg3xCy
— Smartkarma (@smartkarma) February 12, 2024
— Jesse Felder (@jessefelder) February 9, 2024