Nvidia drives ~43% of S&P 500’s YTD gains; market resembles 2008, overvalued stocks.

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Nvidia accounts for a staggering 43% of the S&P 500’s gains year-to-date, highlighting the dismal breadth of the market. Many stocks are down while tech continues to monopolize attention, reminiscent of the unsettling patterns seen in 2008. If you’re bullish and believe the Fed will cut rates soon, you must recognize that stocks are now glaringly overvalued relative to long-term Treasury bonds.

We’re witnessing 2007-level overvaluation, as indicated by the 10-year yield minus the S&P earnings yield. The S&P 500’s heavy concentration in its top 10 stocks, surpassing even the dotcom bubble era, threatens market diversification and stability. Any underperformance in these stocks could spell trouble. Bob Kudla suggests that the Federal Reserve cutting rates could trigger either a contagion or a blow-off top in the stock market by Labor Day 2024.

Bob Kudla gives us his take on the Federal Reserve cutting rates causing contagion or a blow off top in the stock market by Labor Day 2024.

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