Stocks surged in the first quarter of the year, buoyed by investor confidence in the resilience of the US economy. However, as the market enters the second quarter, analysts debate whether the momentum can be sustained after the S&P 500’s strongest start since 2019.
“The prevailing bet is that the US economy will continue to grow as inflation falls closer to the Fed’s 2% goal, a so-called soft landing scenario,” states Citi US equity strategist Scott Chronert. Yet, concerns linger about a potential market correction following the recent bullish streak.
Goldman Sachs maintains a year-end target for the S&P 500 but explores various scenarios, including downside risks like overoptimistic tech earnings and Federal Reserve policies that could hinder economic growth. On the upside, potential further gains in Big Tech or a broadening of the market rally offer optimism.
While some analysts express caution, others like Deutsche Bank’s Binky Chadha see a robust case for continued market growth, citing positive economic indicators and a healthy investment environment.
Despite recent inflows into the equity market, analysts suggest that risk appetite remains moderate compared to previous rallies, tempering concerns of abrupt market shifts.
As the debate rages on, investors brace for potential volatility, closely monitoring economic data and corporate earnings for clues on the market’s next move.
