Despite the slump in Nvidia's stock price, the volatility in the Bitcoin market and the political uncertainty caused by Biden's disastrous debate, the S&P 500 index is still on the rise. In terms of product structure, 10-30 billion yuan products have achieved operating income of 401/1288/60 million yuan respectively, with an overall sales volume of 18,000 kiloliters, a +28.10% YoY growth, which is a significant increase.

This week, under the leadership of tech giants, the S&P 500 index achieved a weekly increase of 2%, its best performance since April. This week, growth tech other than Nvidia rose across the board, with Google, Apple, Microsoft, and Meta achieving historical highs.

Thanks to heavyweight economic data such as non-farm payrolls, the market sentiment has improved significantly, with many people believing that the US economy is still in expansion and recession can be avoided. At the same time, a rate cut by the Federal Reserve is highly anticipated.

"The Federal Reserve is still the dominant factor, and the market believes that rate cuts will eventually come," said Mark Freeman, CIO of Socorro Asset Management. As for political risks, fiscal policy will not undergo major changes regardless of who wins the election.

Some bearish analysts lost their jobs, and some institutions even gave up on target prices.

Despite facing multiple uncertainties, the US stock market still maintains strong growth momentum, not only damaging the morale of the bears, but also increasing the difficulty for analysts to determine the market trend.

Talking about this, we have to mention Marko Kolanovic, JPMorgan's chief market strategist, who resigned.

Kolanovic is known for his continuous bearish view on US stocks, but he completely misjudged the market trend for more than two years:

In January 2022, when US stocks reached a high, he confidently suggested that investors significantly increase their holdings, but the S&P 500 fell from January to October, a cumulative decline of nearly 20%.

Starting from the end of September 2022, Kolanovic began to take a bearish view on US stocks and advised clients to reduce their stock positions. As a result, the S&P 500 started to rise from the lowest point in October and has been rising ever since, with a cumulative increase of more than 50%.

This operation can be described as a textbook-level "reverse indicator," and it also led Kolanovic to lose his job at JPMorgan.

Not only that, but some institutions even gave up on giving target prices for the S&P 500 index.

Researchers at Piper Sandler & Co. say that because the index is overly concentrated in a few stocks, traditional forecasting methods have lost their meaning.

"Mag 7" is becoming more and more expensive, leading to the rise of the large cap market.

"This year's performance of the US stock market shows obvious dualization: the share prices of the "Magnificent Seven" continue to rise, while other stocks are relatively flat," said Jeff Muhlenkamp, whose mutual fund has outperformed 97% of its peers over the past three years.

Given the high valuations of these market-leading stocks, it is difficult to believe that this trend can continue. However, so far, this trend has indeed continued.

As mentioned in a previous Wall Street article, nearly 60% of the US stock market's gains in the first half of the year came from just five tech giants, including Nvidia, Microsoft, Amazon, Meta and Apple, among which Nvidia's gains contributed as much as 31%. In the second quarter, Nvidia, Apple, and Microsoft contributed more than 90% of the large cap gains.

Backed by artificial intelligence, tech giants provide strong growth narratives, attracting a continuous influx of investors into the market. Nvidia's stock price has repeatedly hit new highs and has taken the top spot in global market value, vividly illustrating the phrase "the more expensive, the more love."

However, the concentration of the stock market in a few stocks is not a positive signal.

Trading at a 26x PE ratio, the S&P 500 index's valuation is higher than in any election year since at least 1990.

Of course, it is not advisable to predict an immediate stock market downturn solely based on the current overvaluation, but this high overvaluation status may indeed mean that the stock market's returns in the future period (especially after the election) could be lower than in the past.

Dan Suzuki, Vice Chief Investment Officer of Richard Bernstein Advisors, said:

Today, the high overvaluation of US giant technology stocks may mean that their performance over the next decade could be very poor, as they have occupied an absolute dominant share, and the overall market return of the US stock market may also be quite flat.

The sharp drop in the Bitcoin market is another noteworthy event this week.

Although Trump’s support of cryptocurrencies should have been bullish for cryptos, Bitcoin still suffered heavy losses.

This once again shows that the macro politics has caused an increase in uncertainty in the market.