The S&P 500 has rallied on the back of the AI ​​boom, but parts of the index could signal a recession. Here’s what 7 experts said.

New York Stock Exchange

New York Stock Exchange.Photo by Wang Ying/Xinhua via Getty Images (Xinhua/Wang Ying via Getty Images

  • The S&P 500 has come under intense scrutiny, given that its gains were not widespread and were fueled by a handful of tech stocks.

  • Many experts pointed to the high concentration risk, while others warned of an imminent market sell-off.

  • Here’s what 7 big voices have said about the benchmark – and what’s in store for the S&P 500.

US equities are at a crossroads, with Wall Street pundits divided on the market’s ability to sustain this year’s rally amid recessionary risks.

A number of leading analysts have warned of a potential sell-off in the coming months, pointing to the fact that the S&P 500 Index’s year-to-date advance has not been broad-based – and was largely due to strong gains in a handful of Big Tech stocks fueled by hype around artificial intelligence.

Veteran economist David Rosenberg warned that the benchmark US stock index was already showing signs of recession as stocks in key sectors linked to the real economy – such as consumer discretionary, transportation and banking – plunged .

Here are the latest comments on the S&P 500 from 7 leading voices.

Mohamed El-Erian, Senior Economist and Advisor to Allianz

“Today’s US price action is another reminder that this year’s favorable stock market performance is still in a handful of tech stocks. Not only is the Nasdaq outperforming again, but also the S&P 500 would be in negative territory if there were no #Nvidia,” El-Erian said in a Tweeter THURSDAY.

David Rosenberg, Senior Economist and Founder of Rosenberg Research

“The question always comes up – why isn’t the S&P 500 signaling a recession? , 2001 and 2007-09,” Rosenberg said in a tweet Thursday.

Liz Ann Sonders, Chief Investment Strategist at Charles Schwab

“While the S&P 500 (blue) has risen in recent months, there has not been as much of an increase in the ratio of consumer discretionary sectors to consumer staples sectors (orange).” (In a TweeterSonders was echoing Rosenberg’s point that key economy-related stocks have plunged despite the overall index rising so far this year, and referring to a chart with blue and orange lines).

Larry McDonald, founder of “The Bear Traps Report”

McDonald’s warned that the S&P 500 could crash nearly 30% by December as falling corporate profits, lower government spending and banking turmoil pose a risk to stocks.

“Internally, we crashed,” he told Insider’s Theron Mohamed last week. “What didn’t crash – where I’m wrong – is that the capital moved from those crash sites to hiding places,” he added.

Manish Jabra, Head of US Equity Strategy at Societe Generale

“The AI ​​boom and hype is strong,” Kabra said in a note, according to Bloomberg. “So strong that without popular AI stocks, the S&P 500 would be down 2% this year.”

Jurrien Timmer, global macro director at Fidelity Investments

“Why, in this likely twilight of the long secular bull market that began in 2009, is the gap widening between the top 50 stocks of the S&P 500 and the other 450?” Timmer said in a recent Tweeter.

“The leadership of the past decade was driven entirely by relative earnings, so the valuation gap did not happen at the top (as it did at the top of the tech bubble in 2000), but at the top. course of the decline that followed. As was the case during the 1973-75 period, investors were looking for a place to hide, and that place was the proven “single decision” stocks” , he added.

John Hussman, American economist

“Our primary indicator of market internals remains unfavorable, based on the evenness and divergence of market action across thousands of stocks, industries, sectors and individual security types, including variable solvency debt,” he said. “A market meltdown, at its core, is really nothing more than risk aversion encountering a market that is not priced for risk,” Hussman said.

“These conditions may change, but for now, we continue to estimate the probability of negative S&P 500 total returns over 10 to 12 years, with the prospect of interim losses in the range of -60%,” a- he added.

Read the original article on Business Insider

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