The US stock market has so far recorded a remarkable rally in 2024. But in the next few years, investors will probably have to adapt to significantly worse performance, warns a Goldman Sachs strategist.
• Change in the US stock market awaited
• Stagnation of the recently so popular growth values forecast
• End of the ultra -ferred Monetary policy
The S&P 500 hurried from record to record this year. A look back shows that the index, which reflects the wide US stock market, has performed well over the years and exposed an average annual return of 13 percent in the past ten years. An essential driver for this was a long-term ultra-loose monetary policy of the US Federal Reserve.
But in the future, investors will probably have to prepare for worse times, reports “The Motley Fool”, citing a Goldman Sachs expert. David Kostin, Chief Us Equity Strategist at the US investment bank, assumes that the S&P 500 will only increase by 3 percent in the next ten years.
Dangerous dominance of the tech giants
The expert supports his warning on the fact that a small number of very growing technology companies are overweight in the S&P 500 – and that in an economic environment in which it is extremely difficult for every company to maintain high sales growth and high profit panels over a longer period of time “.
In fact, according to “The Motley Fool”, the ten largest components of the S&P 500 – including the tech giant Nvidia and Microsoft – are currently making up for around 30 percent of the index value. Since the S&P 500 is an index that is weighted after market capitalization, a company contributes more to the performance of the index the higher its market capitalization. Conversely, this means that index growth affects if the growth of these tech giants – as feared by Goldman Sachs – gets in the stop.
That is why the tech giant could weaken
The US investment bank sees monetary policy as a stress factor for the tech giants. Because in the fight against stubbornly high inflation, the US Federal Reserve has temporarily raised its key interest rate from near zero to 5.25 to 5.50 percent since March 2022 – that was the highest sentence in more than two decades. The US currency keepers have now initiated an interest rejection and in September 2024 the interest rate level in a large step to 4.75 to 5.00 percent, but the era of extremely low interest rates should have come to an end. This is bad news for tech companies, because because of their more traditional industries, these tend to be very interest-sensitive.
The importance of AI for the S&P 500
It should also not be forgotten what significant role artificial intelligence plays for the S&P 500. For example, Arne Rautenberg, equity fund manager at Union Investment, had already pointed out in a contribution to “cash” in May that the strong price gains of the S&P 500 index have long been determined by a few tech megacon groups and that the relevant driver for them Technology company is a topic: artificial intelligence (AI).
The expert generally assessed the topic of AI positively, after all, AI could change society as the steam engine and the Internet once did. However, he warned that the course development in these titles will not be a straight line upwards, but would be expected to reset. This has already become visible this year, because not all shares of the “Magnificent Seven” are among the winners. “So investors need a certain risk triviality because the courses can also correct,” said Rautenberg.
Editor finance.net
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