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By: Ilana Siyance
A longtime Wall Street analyst made a gloomy prediction about the stock market’s expected performance for the remainder of 2024. As reported by the NY Post, Sam Stovall, CFRA Research’s chief investment strategist, said that the recent tech rally may soon come to an abrupt halt. The analyst cited that the confidence Index for June shows that Americans are feeling low about the economy, with the index reaching its lowest level since November. He noted that tech was “the only outperforming sector”, thanks to the booming artificial intelligence market.
AI chipmaker Nvidia had experiencing extraordinary gains again last week to become the world’s most valuable company ahead of both Apple and Microsoft. Nvidia was valued at over $3.3 trillion. On Monday, that excitement was already worn off, with Nvidia stocks sliding over 6 percent as of mid-day, down to $118.70 per share. The market cap fell back to $2.92 trillion.
“How long can this jumbo jet fly on only one engine?,” Stovall said in an interview with Yahoo. “I am getting increasingly concerned that we have to endure another decline of 5 percent or more before the year is out,” he said. Stovall, who previously served as a managing director for S&P Global, compared the predicted downturn to a “resetting of the dials” or “digestion” after a large meal. “If we start to see other economic indicators that point to an economic slowdown that causes investors to worry that maybe we are headed for a recession,” he added.
Per the Post, Stovall said that in the first three months of 2024, the S&P 500 saw its 11th-best first quarter return since the end of World War II, having surged by more than 10 percent in the quarter. He said there was “a silver lining” because the top 15 years of returns “posted full year gains with the average being above 20 percent.” He added, however, that 14 of those top-15 returns were followed by a decline of at least 5% or more – with some of the drops taking back over 12%.
Stovall noted that investors could still get “tripped up” by any “unanticipated” bad economic news, such as a bank failure, bringing on a halt to any future increase in stock prices.
Per the Post, other analysts and senior executives have sounded a similar warning, cautioning about a possible upcoming slowdown in the economy. The rising price of goods and high interest rates would be the primary culprits. Last month, Bank of America CEO Brian Moynihan warned that consumers and businesses were cutting down on spending. “Both of our customer bases that have a lot to do with how the American economy runs are saying, ‘You know what? I’m being careful, slowing things down,” he told investors at the end of May.
Similarly, last month, Bob Nardelli, former CEO of Home Depot and Chrysler, blamed the Biden administration for “overspending”, and warned that the “fault lines” in the economy were “ready to crack”, per an interview with Fox Business News.
