Cash shower infuses US stocks with optimism

2024-02-28
Summary:

US stocks ended Tuesday nearly flat as the earnings season winds down. Equities surged recently, mainly driven by enthusiasm for AI stocks.

US stocks closed near flat on Tuesday as corporate earnings season winds down. Equities have been on a furious rally for weeks, fuelled largely by enthusiasm about AI-related stocks.

S&P 500 members repurchasing $63 billion worth of their own stock during the first week of February, the highest since May 2023, according to data from Deutsche Bank.


It is a sign that companies feel they are in a stronger position than the past few quarters. Some employers that underwent layoffs over the last year now turn more bullish, such a Meta and Uber.


Meanwhile, dealmaking year to date is up 55% compared to the same period last year, according to data compiled by Bloomberg. That also indicates companies are more willing spend their cash flow.


With a deep dive into 100 years of market returns, Schroders’ Duncan Lamont found average inflation-adjusted stock returns in the 12 months after hitting new records are superior to those from any other month.


Nonetheless, while market participants are pricing in 70% to 80% odds of a soft landing, JPMorgan Chase CEO Jamie Dimon forecast the likelihood is “half of that” considering geopolitical tensions.

SPXUSD

The S&P 500 index is within touching distance of the all-time high it hit earlier this week. Technical indicators point to more gains and we see some consolidation around 5,000 in the upcoming sessions.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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