Amid high interest rates, the S&P 500 index could collapse by 20%. This forecast gave Chief Global Market Strategist at JPMorgan Marko Kolanovic on CNBC.
“I’m not sure we can avoid her [рецессии], if we remain at this level of interest rates,” the analyst warned. He noted that the labor market is still strong, but consumers are already starting to feel stressed. As evidence of this, Kolanovic mentioned delinquencies on credit cards and car loans.
The S&P 500 index on Thursday, October 5, fell by 0.13% to 4258.18 points. The index ended the previous four weeks in the red; this week is likely to be no exception. Overall, the benchmark fell by about 7.5% from its local peak at the end of July. But Kolanovic believes that such dynamics are not yet a clear sign of the beginning of a large-scale sell-off in the market. According to the expert, a rebound in the index is still possible in the near future amid the publication of macroeconomic reports in the next few months.
“Could there be another five, six, seven percent upside in stocks? Of course…” admitted the JPMorgan strategist. However, he warned. that there is also a risk of the S&P 500 collapsing by 20%.
Much of the S&P 500’s gains this year have come from rallies in seven big tech stocks—Apple, Amazon, Meta* (recognized as an extremist organization in Russia and banned, as are both company-owned social networks), Alphabet, NVIDIA, Tesla and Microsoft. Kolanovic pointed out that due to record growth in their stock prices this year and high interest rates, these seven big tech companies are among the companies most vulnerable to a potential sell-off in the stock market. According to the strategist, if the US economy plunges into recession, the shares of the largest technology companies will go down and catch up with the shares of companies from the affected sectors.
According to Kolanovic, against this background, it is better to choose money market instruments and short-term Treasury bonds as protective assets.
JPMorgan is not the only bank on Wall Street that has expressed concerns about the impact of high interest rates on the US stock market. Goldman Sachs and Morgan Stanley also believe stocks are unlikely to continue their rally this year.
2023-10-06 06:50:23
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