S&P 500 Hits 44th Record High This Year With Tech Sector Still Strong

Over the past ten years, tech stocks have been a major part of this growth.

While tech stocks continue to lead the charge, recent volatility presents an attractive buying opportunity, according to Solita Marcelli, chief investment officer at UBS Global Wealth Management. She remains positive on the tech sector and the outlook for artificial intelligence, suggesting that investors use volatility to build long-term AI exposure.

On the corporate earnings front, Bank of America forecasts a 4% year-over-year growth in third-quarter earnings per share, though lower than the 11% growth seen in the second quarter. Adam Crisafulli, founder of Vital Knowledge Media, highlighted that a mix of stimulus measures, declining inflation, and resilient growth has led to sideways movement in the S&P 500.

Looking ahead, Dubravko Lakos-Bujas from JPMorgan predicts corporate earnings growth will accelerate from 3% to 12% over the coming years, with companies focusing more on capital expenditures than stock buybacks. This shift is expected to support economic growth further.

Another good sign is that the Fed minutes had little impact on the market. Although the notes revealed some differences among officials regarding a 50 basis point rate cut in September, they didn't alter the overall trend toward future rate cuts.

"Today's Fed minutes were pretty 'ho-hum,' which could be good for stock investors," said David Russell at TradeStation. "Policymakers agree inflation is fading and they see potential weakness in job growth. That keeps rate cuts on the table if needed. The bottom line is that Powell might have the market's back headed into the year end." Marcelli also noted that the "lackluster" nature of the Fed's minutes is good news for stock investors, indicating potential economic growth alongside strong job growth and a declining unemployment rate.

As investors await the upcoming Consumer Price Index report, analysts expect the September CPI to show a modest increase of just 0.1%, with a year-over-year rise of 2.3%, the lowest rate since 2021. This upcoming data will play a crucial role in determining future market movements.

Despite current optimism, Lakos-Bujas cautions that the upcoming presidential election in November could spark market volatility, and changes in interest rates may impact corporate profits. Mike Bailey, research director at FBB Capital, also emphasizes that while the Fed's signals are significant drivers, many risks are yet to be reflected in current market prices. Goldman Sachs has raised its year-end target for the S&P 500 to 6,000, reflecting Wall Street's growing confidence in the market's future trajectory.