Bank of America said a pullback for the S&P 500 is now more likely. Recent market volatility has investors worried about more losses for the S&P 500 after gains this year. Both the broad market indexes and the Nasdaq experienced a week of losses. On the other hand, the Dow Jones Industrial Average closed higher last week. Savita Subramanian, head of U.S. equities and quantitative strategy at BofA Securities, said historical patterns suggest broad market indexes do fall. She noted that since 1936, there have been an average of three retracements of 5% or more per year. Corrections of 10% or more occur on average once a year, she said. “We are therefore overdue for a pullback,” Subramanian wrote, adding that “downside risks will rise in the coming months.” The bank’s market timing signal has been downgraded from bullish to neutral, the strategist said, adding there were other concerns. She noted that from a seasonal perspective, investors are heading into August and September, historically weak months for the S&P 500. Additionally, Subramanian added, the CBOE Volatility Index, also known as Wall Street’s fear gauge, typically surges about 25% between July and November in presidential election years. The VIX last traded around 17 and started approaching 12 in July. In fact, strategists expect the S&P 500 to end the year at 5,400. The broader market index closed slightly higher on Friday at 5,459.10 points. “We recently revisited the macro triggers that preceded the S&P 500’s previous peak,” Subramanian wrote. “A more consistent signal that we are still a long way from our target. (Today) only triggered 50%, compared with the S&P 500’s previous peak average of 70%.” In this environment, strategists expect Dividend stocks can outperform the market. Subramanian noted that historically they have contributed more to S&P 500 total returns and can continue to do so. From 1936 to 2010, dividends contributed about 40% to the S&P 500’s total returns, but since 2010 they have accounted for only 15%. .
ABOUT US
Our news website delivers comprehensive coverage on US news, economy, politics, and world events, ensuring you stay informed on the latest developments. We provide timely and accurate news to keep you updated on the most important stories. Stay connected with us for in-depth analysis and breaking news from around the globe.
Contact us: contact@realtimeheadlines.com
© Real Times Headlines - 2024 | All Rights Reserved