Wall Street shines with an impressive eight-day winning streak for the S&P 500, boosting investor optimism. However, experts question whether this surge signals a peak or a sustainable recovery. Let's analyze the drivers behind this rally, including easing trade tensions and economic resilience, as well as the risks to monitor.
Wall Street shines with unexpected vigor. The S&P500, an iconic index comprising 500 giants of the American economy, has seen eight consecutive sessions of gains, an unprecedented sequence in several months. This rally generates a mix of enthusiasm and caution: investors wonder whether this momentum heralds a robust recovery or an imminent peak.
This series of eight days in the green, supported by data from Bloomberg and Reuters, reflects a return of confidence in the stock markets. After months marked by fluctuations related to inflation and geopolitical uncertainties, the S&P500 has regained some lost ground, driven by encouraging economic signals and a more aggressive market psychology.
Several factors converge to explain this upswing:
Analysts diverge on the future of the S&P500. Some, like those at Goldman Sachs, predict a consolidation, arguing that current valuations, near record levels, already factor in the good news. A study by Bank of America reveals that 92% of fund managers believe the index is flirting with a peak for 2025, citing risks of monetary tightening by the Fed and persistent inflation.
Conversely, other experts, backed by data from Morgan Stanley, are betting on a moderate continuation of the rise, driven by strong earnings and a possible acceleration in technological innovation. Median forecasts for the end of 2025 place the index around 5,200 points, representing a modest 5% decrease from current levels.
From a technical standpoint, with a weekly RSI at its lowest since the COVID crash in March 2020 on April 14th, it must regain its 200-day moving average at $5,752. Furthermore, the highest point protected by smart money is at $5,777.
If the price fails to stay afloat, it risks falling into the demand zone between $4,000 and $4,300, also in line with the Fibonacci Bollinger Band.
The cryptocurrency market is not lagging behind. Bitcoin has surpassed $97,000, rising 12% over the week, while Ethereum and other altcoins record similar gains. This correlation with stocks suggests an increased appetite for risk, although cryptocurrencies remain sensitive to their own dynamics, such as institutional adoption and regulatory developments.
The bullish streak of the S&P500, boosted by a more favorable economic and commercial environment, revives optimism. However, macroeconomic uncertainties and high valuations call for caution. Wise investors will need to navigate between opportunities and risks, keeping an eye on economic data and monetary policy decisions. The future will tell whether this rally is a springboard or a peak.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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