After many attempts, the S&P 500 has set new all-time highs this week and investors are wondering what to expect from the US index now, once has managed to erase the losses it suffered due to the coronavirus crisis. The experts are clear about it: if what history says is fulfilled, it will continue to rise during the coming months, although that does not mean that it cannot undergo corrections.
So says Han Tan, market analyst at FXTM. "If we look back at the past cases where the index broke even after a bear market, the S&P 500 has historically added another 4.5% over the next six months, and the next peak came after going up 71% on average, "says this expert.
Although it warns that it will not be a bed of roses. "This does not mean that stocks will be immune to further corrections or a new bear market "He says, and recalls the lessons investors learned in 1989 and 2007. "US stocks entered another bear market in the following 12 months, despite having completely exited the previous bear market," Han Tan recalls. This analyst points out that "additional earnings are not a foregone conclusion."
Despite everything, in Goldman sachs they are bullish on the index. So much so that their analysts have raised the target price of the S&P 500 and believe that the selective US can close the year at 3,600 points.
From FXTM they point out that it will be vital for the performance of the S&P 500 what happens with the new stimulus package being negotiated by Democrats and Republicans. It seems that the Democrats are going to soften their demands to achieve closer positions, as has been assured by the Speaker of the House of Representatives, Nancy Pelosi, which could pave the way and "translate into more short-term gains for stocks."
Although everything could blow up if they increase, even more, the tensions between the US and ChinaAs that could erode the profits of the technology sector, which is the one that has pulled the band after the pandemic, taking Wall Street to current levels and the S&P 500 to mark new highs.
"THE STOCK EXCHANGE CAN KEEP RISING"
Adam Vettese, market analyst at eToro, believes that the S&P 500 may register further rises as long as there is more stimulus. "As long as the US government is prepared to turn on the stimulus tap if necessary, the stock market can continue to rise," says this expert. Now, the question is how long it will last.
"Although it is impossible to predict with great certainty, what can harm the route is a possible second wave of infections," says this analyst, who believes, however, that the US stock market has an important positive support and catalyst, which is precisely the promised stimulus package. As long as investors "have the assurance" that the Trump Administration and the Federal Reserve are going to do their best, "There is no reason why stock prices cannot continue to rise, at least not in the short term.".
The US government and the Fed have played an important role in this market rebound, says eToro. "They have given investors the confidence to continue investing in equities rather than moving toward the perceived safety of liquidity or bonds." Although it is true that right now the return on US debt it is very unappealing, and if all remains the same, it could further encourage investors to buy stocks.
"Considering the ultra-low returns on fixed income assets, all that money in the system is finding its home in riskier assets like stocks. a vaccine is ready for mass launch, that could be the signal for more market participants to bet on the bag, potentially at the expense of having safe assets like gold, "they conclude in FXTM.