S&P 500 WEEKLY OUTLOOK: SLIGHTLY BEARISH
- S&P 500[1] fails to sustain upward momentum seen at the tail end of May, finishes the week lower
- Despite better and more reasonable valuations, there aren’t very strong reasons to show bullishness at this time
- May U.S. inflation data will be the next big catalyst for stocks
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U.S. stocks were unable to sustain the upward momentum seen at the tail end of May and finished the week slightly lower as sentiment began to sour again. JP Morgan CEO Jamie Dimon's comments cautioning investors to prepare for an economic "hurricane"[3] contributed in part to the bearish mood. Elon Musk echoed that sentiment and warned that he has a "super bad feeling" about the economy, reinforcing the prevailing negative narrative. When it was all said and done, the S&P 500 lost 1.2%, while the Nasdaq[4] 100 declined about 1%.
Despite the economy's resilience, investors remain very worried about the outlook, fearing that the Fed could trigger a hard landing in the process to curb inflation - a bad outcome for corporate earnings. The latest dataflow[5], rather than reassuring the market that the Armageddon scenario is still farfetched, has traders speculating that the U.S. central bank will have to step on the gas and raise borrowing costs more forcefully to restore price stability over the forecast horizon. For this reason, U.S. Treasury rates have resumed their ascent, with the 2-year yield starting to push back towards its cycle highs in the past few trading sessions.
With so much uncertainty, there is no winning on Wall Street[6] these days, nothing satisfies traders. We have
