John Koudounis, president and CEO of Calamos Investments, said he doesn’t expect any central banks to raise interest rates and that there is still “sideline” money in the market.
There may be problems in the future US Stock MarketAccording to analysts at Stifel.
Stocks are headed for another sharp decline, with the S&P 500 index potentially falling 10% by the end of the third quarter of this year, the investment bank warned in a client note on Tuesday.
Analysts say slowing economic growth and high inflation, characteristic of a phenomenon known as stagflation, have led to Federal Reserve The Fed indicated it would keep interest rates high, disappointing investors who had been hoping for several rate cuts this year.
“A no-landing scenario (albeit modest growth) and rising resource use amid stronger-than-expected inflation (moderate stagflation) places greater constraints on the Fed than it would like to ease monetary policy,” the report said.
Stagflation fears return with a vengeance
Pedestrians walk in front of the New York Stock Exchange in New York on February 16, 2024. (Michael Nagle/Bloomberg via Getty Images/Getty Images)
Investors had previously bet on a series of bold rate cuts this year, but have been steadily lowering those expectations following cautious messaging from Fed officials and signs that inflation is slowing.
Market prices currently suggest the Fed will cut rates at least once or twice this year, with the first cut coming in September, according to CME Group’s FedWatch tool.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 38755 | +183.97 | +0.48% |
| I:Comp | Nasdaq Composite Index | 16870.597079 | +41.93 | +0.25% |
| SP500 | S&P 500 | 5293.46 | +10.06 | +0.19% |
Inflation rises to 3.4% in April as prices remain high
But Stifel analysts predicted the central bank will not cut rates at all this year as inflation remains unusually high.
“We continue to forecast the S&P 500 to decline approximately 10% from its recent peak to around 4,750 by the end of the third quarter of 2024,” they wrote.
Stock prices hit new records in mid-May, with the Dow Jones Industrial Average topping 40,000 for the first time in history, but have since fallen from those highs.
Stock indexes fell on Tuesday as investors awaited the Labor Department’s key jobs report, with the Dow Jones Industrial Average down 54 points and the S&P 500 down about 0.34%.
A Wall Street sign in New York on January 27, 2023. (Photographer: John Taggart/Bloomberg via Getty Images/Getty Images)
Stifel’s gloomy forecast comes after a volatile year for markets.
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The three indexes will decline in mid-2023, Federal Reserve The Fed will raise interest rates further than previously expected and will likely keep them at their peak levels for an extended period of time. But the Fed has recouped those losses and more, with the S&P 500 up more than 29% since its trough in late October.
That index has risen about 10.6% since the beginning of the year, while the Dow Jones Industrial Average has added 2.5%, while the tech-heavy Nasdaq Composite Index has added about 12% so far this year.
