While the market’s gains stalled on concern about the scale of the run-up and further rate hikes from the Federal Reserve, the tech-heavy Nasdaq 100is still up some 37 per cent this year.
And on Monday, the S&P 500 was headed towards its first back-to-back gain this month, with Nvidia among the top drivers of the advance.
Banks optimistic about AI
Wall Street banks remain optimistic about AI’s potential applications and are busy gaming out which corners of the stock market stand to benefit. Strategists at Goldman Sachs, for example, foresee a large jump in the earnings per-share of the companies it’s tracking that may gain most from the new technology.
According to Mr Chronert, the release of first-quarter earnings prompted a rush into anything AI related after revealing how a handful of the biggest companies, like Microsoft and Amazon, were planning to deploy it.
In the second quarter, however, the attention shifted to how the impact will be felt more broadly – setting the stage for it to start cropping up in a wider array of stock prices.
Mr Chronert upgraded his year-end target on the S&P 500 to 4600 from 4000 earlier this summer on expectations for earnings growth next year and rising optimism that the Fed can engineer a soft landing for the economy, while admitting that the bank failed to foresee the surge in tech stocks. The S&P 500 was trading around 4,433.31 on Tuesday.
The US equity strategist said Citigroup’s target incorporated expectations that the market would be buffeted by further volatility.
“You reign in expectations and you don’t set yourself up for disappointment as much going forward,” he said. “When we raised our target, we were very clear, we want be more aggressive on pullbacks to give us a little bit better opportunity in the end of the year.”
Bloomberg
Bloomberg
Source: afr.com
