Rapid earnings of $45,000 within an hour, leaving law enforcement still investigating.
U.S. Stock Market Rally Continues Amidst Extreme Greed
The U.S. stock market may continue to rally in the coming weeks, despite a reading of 75 on the CNN Fear & Greed Index, indicating extreme greed. This sentiment, typically a contrarian indicator, does not necessarily mean a downturn is imminent.
Several factors underpin the likelihood of the rally continuing in the near term. Goldman Sachs projects that the Federal Reserve could reduce interest rates sooner than previously forecast, which could boost equity valuations by reducing borrowing costs and making stocks more attractive relative to bonds.
Lower bond yields also tend to increase the price-to-earnings ratios for stocks, supporting higher stock prices even if earnings growth slows. Goldman Sachs notes that a 50 basis-point drop in real bond yields can raise the S&P 500 forward P/E by about 3%, all else equal.
Strong first quarter earnings and a resilient U.S. economy provide underlying support for stocks, reducing the risk that valuations are unsupported by fundamentals. Growing confidence in U.S. tech companies, especially the "Magnificent 7," driven by optimism about artificial intelligence innovation, is attracting investors.
Surveys indicate a large portion of investors remain bullish on major indices like the S&P 500, fueling continued buying. This optimism persists despite extreme greed sentiment readings, which are often contrarian indicators but do not prevent short-term rallies.
That said, risks remain that could end or reverse the rally, including rising Treasury yields moving into a "Danger Zone" that pressures stocks, potential policy uncertainties (e.g., Federal Reserve leadership), and geopolitical or tariff-related events. However, the current backdrop of expected easier monetary policy, lower yields, solid earnings, and tech-driven optimism underpin the likelihood of the rally continuing in the near term.
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Investors continue to show optimism towards the stock market, fueling further investments in equities. In light of the rising sentiment and projected interest rate reductions by the Federal Reserve, finance experts are advising that investing in stocks, particularly those in the technology sector, could remain a prudent move in the coming weeks.
