A Midpoint of 5700 is the Next Target
Last week on Wall Street finished with US stock futures' initial drop to the area slightly below the major 5,200 support, led by corrections in some tech assets, yet the negative start of Friday's trading session was quickly replaced by a powerful and broad rebound to the next big figure of 5,300. This proves the general bull's commitment to buy more shares at the earliest opportunity. A bounce nature of the market's sentiment was later confirmed during the following two days. A current market's ability to retest lows shrank to 5,233.50 this Monday, followed by one more spike to 5,290. US manufacturing activity data slowed for the second month in a row to strengthen expectation of lower interest rates rather sooner than later, bond yields moderated to clear the ground for purchasing stock assets as well. Today many traders expected the US Labour Department's numbers of new job openings may serve as a one more pillar to give more confidence. As a matter of fact, 8.06 millions of new job vacancies is worse in terms of the labour market conditions, compared to 8.37 million in average expert estimates, while the previous month's number was revised from a 3-year low of 8.488 million to 8.355 million. Yet, this revived hopes for a dovish turn in the Federal Reserve's policy cycle. As traders and investors, we don't care much about the American or world economy, but what we exactly need for the continuation of the rally is just some hope for milder monetary conditions, even if this hope caused by a depressive economic situation. Persisting inflation worries represent another important driver for long-term investors to convert their savings from cash to growing stocks. The season of corporate earnings is very close to the end, and it was rather successful, especially for the AI-related segment of the market. And that's why I would adhere to the buy and hold tactics, related to chosen stocks for my portfolio at least, betting on higher S&P 500 levels already in the course of the summer. I also agree with Wells Fargo analysts who freshly advised "staying invested in the S&P 500", despite the market's "strong performance so far in 2024", as they see more "potential upside", mentioning that "historically, the S&P 500 has performed well in election years and the year following". Indeed, the last three election cycles faced even stronger performance. As to Wells Fargo's target for the S&P 500, the reputable banking institution lifted it to "a midpoint of 5700" by the end of 2025. Reinvesting later may be difficult, Wells Fargo said, as it could lead to "missing out on periods of strong performance".
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