S&P 500 Outlook: Resilience Amid Challenges - New Record Highs on the Horizon?

As the S&P 500 index continues its impressive performance, investors are keenly watching for the possibility of new record highs. Despite facing challenges like high inflation and interest rates, the S&P 500 and the broader market have shown resilience, with the index coming within 5% of its all-time high last week. The market's strength has been fueled by better-than-expected corporate results, with an impressive 81% beat rate to date.

However, it is essential to recognize that the market has been on an extended rally, and valuations may no longer be considered cheap. Moreover, the recent US downgrade by Fitch has provided investors with a good opportunity to secure some profits. While we cannot entirely rule out the possibility of new highs, it is crucial to exercise caution.

 

FXMAG

Are we facing new record highs for the S&P 500 index?

The S&P 500 was doing very well, as was the broader market, despite high inflation and interest rates: at one point last week it was just <5% away from the ATH seen on the back of better-than-expected corporate results (81% beats to date). The market is, however, coming off a long rally and probably no longer cheap, and the recent US downgrade by Fitch was a good excuse to take some profits. It would be very risky for us to say that the possibility of new highs should be ruled out, but we believe that a consolidation is more likely at the moment - even given the seasonally unfavourable period of year - and that any move towards 4.700 would be difficult, at least for the next few weeks.