Is the S&P 500 Index unstoppable?

The bi-weekly Monitor gives you a structured overview of the current capital market environment and highlights important developments.

Current market commentary

The announcement of snap elections in France has recently led to increased volatility in Europe. The euro lost value against the US dollar, the yield differential between French and German bonds widened significantly and French equities, particularly banks, came under heavy pressure. In contrast, the S&P 500 climbed from all-time high to all-time high, boosted by good corporate results from the technology sector and easing US inflation. A somewhat more hawkish Fed, which in its projections expects only one interest rate cut this year, was unable to do anything to dampen the positive mood in the US. The Q2 reporting season, which is due to begin shortly, is likely to be correspondingly relevant. Investors and analysts appear to be optimistic about the quarterly results. This is positive in itself but makes positive surprises more difficult. We see only limited upside potential in the short term and an increased probability of consolidation in the medium term.

Short-term outlook

The next two weeks will be exciting in terms of (monetary) policy. On June 20, the Bank of England will decide on interest rates. The G7 meeting of finance ministers will take place in Italy on June 23-25 and the EU summit in Brussels on June 27-28. Industrial production and retail sales (May) from China and the US Empire State Index (June) will be published today. This will be followed tomorrow by inflation data (May) from the eurozone, ZEW economic expectations (Jun) from Germany and US data on retail sales and industrial production (May). The Philadelphia Fed Index (Jun) and US building permits (May) are due on Wednesday. On Friday, the preliminary Eurozone PMIs (Jun) will be published. Next week, US consumer confidence (Jun), German consumer confidence (Jul) and IFO business climate index (Jun), US durable goods orders and the final US GDP growth rate (Q1) are due.

Is the S&P 500 Index unstoppable?

Source: Bloomberg, Time period: 01/01/2014 – 14/06/2024
  • The S&P 500 is unimpressed by all risks – whether inflation, the Fed, the economy, geopolitics or the new elections in France. Driven by a few large stocks, the benchmark index has not suffered a daily loss of more than 2% for more than 300 trading days.
  • Seasonally, the historically best two weeks of the year are still to come at the beginning of July, but the high earnings expectations for the upcoming reporting season, coupled with a high level of investor positioning, harbour the risk of at least a temporary correction.