US equities dragged lower by chip makers
2024-10-31
Summary:
US stock indexes fell on Wednesday due to a drop in chip stocks, but the S&P 500 is still on track for its sixth month of gains.
US stock indexes closed lower off their record highs on Wednesday as chip stocks tumbled. The S&P 500 was set for a sixth straight month of gains despite US election though.
The US economy increased at a 2.8% annualised rate on strong consumer spending, according to the government data, slightly below economists' forecast of 3.0% growth. Stock market was barely moved on the report.
Companies in the benchmark index are beating earnings estimates at the lowest rate in nearly two years - a sign of consolidation. Results from firms accounting for nearly 42% of its market cap are due this week.
Skepticism is also growing around how long the AI boom will last. Earnings growth at the technology heavyweights is projected to have slowed sharply in Q3 from the previous three months.
US stocks are unlikely to sustain their above-average performance of the past decade as investors turn to other assets including bonds for better returns, Goldman Sachs strategists said.
They expect the S&P 500 to post an annualised nominal return of 3% over the next decade, compared with 13% in the last decade, and see a roughly 72% chance that debts will outperform equities in the period.
The index could continue to fluctuate in a tight range in the near term if the upcoming earnings reports do not deviate significantly from forecast in general. The bottom end at 5,770 is acting as support.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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