US stock indices and gold prices recovered their losses following concerns over US inflation.
Persistent inflation at the producer and consumer levels in the US didn’t deter the stock indices, which remained close to multi-year highs.
Inflation and Market Reactions:
This week’s US inflation data drove Treasury yields and the US dollar up as markets adjusted expectations for US interest rate cuts.
Above-expected US CPI and PPI figures boosted the US dollar, initially causing a decline in US indices. However, these effects were largely reversed by the week’s end, stabilizing most markets.
Market Volatility and Recovery:
The VIX chart showed mid-week volatility with a significant rise post-US CPI announcement, which was later mitigated in the following days.
Despite fluctuations, US indices closed the week near their recent highs.
International Market Performance:
The FTSE 100 stood out by performing strongly against its global counterparts, supported by positive UK economic data and a slight rise in the US dollar, benefiting from the fact that around 70% of its company earnings are generated overseas.
STOCK MARKET:
Goldman Sachs raises S&P 500 target to 5,200 due to profit expansion.
The firm increased its forecast following the stock market surpassing the 5,000 milestone.
This marks the second time Goldman Sachs has updated its S&P 500 target for 2024.
The new target suggests a 3.9% increase from the current level, adjusting the forecast up from 5,100 to 5,200.
Initially, Goldman Sachs predicted the S&P 500 would reach 4,700 by year-end.
Goldman’s 5,200 target now aligns with optimistic projections from Wall Street analysts like Tom Lee and John Stoltzfus.
The firm also revised its earnings-per-share forecast for the S&P 500, anticipating stronger growth in tech and communication sectors.
Despite the upward revision, Goldman Sachs expects valuation multiples to stay near present levels, emphasizing earnings growth as the key to further gains.
The S&P 500 has seen a 4.9% increase this year, driven by Federal Reserve policy shifts and AI-driven tech stock rallies.
Wall Street peers, including Bank of America, consider raising their targets, suggesting the median S&P 500 forecast might be too conservative.
Even bearish analysts like Morgan Stanley’s Michael Wilson acknowledge the potential for broader market gains, though Wilson’s target implies a potential decline.
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