By Paul R. La Monica
Iran. Inflation. The prospect of a Federal Reserve rate hike. Despite these risks, the S&P 500 is up more than 6% this year. That suggests some complacency.
You can see this in a weekly gauge of sentiment officially known as the Levkovich Index. Citigroup named the model in 2021 to honor the bank's late chief U.S. equity strategist, Tobias Levkovich.
A year ago, the index, which measures margin debt, trading volume, short interest, and six other factors, had a reading of 0.19. Anything above 0.38 is euphoria and below -0.17 is panic. It's now showing signs of giddiness: On June 5 it hit 0.93, its highest since the post-Covid rally of 2021, says Scott Chronert, Citi's head of U.S. equity strategy. Barron's often displays the index on the Market View page.
When the index has been this high in the past, the median decline for the S&P 500 over the next 12 months is 13%. Still, notes Chronert, stocks can "exist in euphoric conditions" until they have a concrete reason to fall. That makes timing very tricky.
In fact, Citi expects stocks to forge ahead, recently raising its S&P 500 forecast to 8,100 by year end, up from 7,700. The main reason? Earnings growth should remain strong, Chronert says, largely driven by an artificial-intelligence spending supercycle that's still in its middle stages. Don't be surprised if the party lasts awhile longer.
Last Week
Markets
Stocks globally sank after the Nasdaq selloff on Friday. Iran and Israel traded airstrikes. Volatility hit stocks. President Donald Trump warned the Federal Reserve not to raise rates. Stocks rallied on Tuesday then fell as the tech rally faded and after the U.S. exchanged strikes with Iran over a downed helicopter. May inflation came in at 4.2%, hottest in three years. The European Central Bank broke the ice by raising rates. Stocks snapped back on Thursday on hopes for an Iran deal, and rode the SpaceX initial public offering on Friday. On the week, the Dow rose 0.7%, the S&P 500 0.7%, and, yes, the Nasdaq Composite 0.7%.
Companies
Meta Platforms said reports of a big stock sale are "pure speculation." Apple introduced an AI-enabled Siri at its developer conference, CEO Tim Cook's last. Marvell Technology and Flex will join the S&P 500; Pool and Campbell's will drop off. New World screwworm cases in U.S. cattle rose to nine. The U.S. added Alibaba, Baidu, BYD, and NIO to its list of companies it says are helping China's military. Oracle said it expects $70 billion in net cash outlays for data centers in fiscal 2027.
Deals
SpaceX sold 556 million shares for $135 each, raising $75 billion. On its Friday debut, the stock rose 19%...OpenAI filed for its IPO...Italy's Intesa Sanpaolo offered $35 billion for Banca Monte dei Paschi di Siena... GSK agreed to buy cancer biotech Nuvalent for $10.6 billion... Frasers Group bid $2.3 billion for Hugo Boss.
Next Week
Tuesday 6/16
The Census Bureau reports residential construction data for May. Economists forecast a seasonally adjusted annual rate of 1.43 million privately owned housing starts, slightly less than in April.
Wednesday 6/17
The Census Bureau reports retail and food service sales for May. Consensus estimate is for a 0.5% month-over-month increase, matching the April data. Excluding autos and gas, retail sales are expected to rise 0.3%, two-tenths of a percentage point less than previously.
The Federal Open Market Committee announces its monetary-policy decision. The central bank is widely expected to leave the federal-funds rate unchanged at 3.5% to 3.75%. The FOMC members will also release their Summary of Economic Projections. The last SEP, from March, showed a median projection of one quarter-point interest-rate cut by the end of this year. Traders are currently pricing in one quarter-point rate hike by year end. This will be the first FOMC meeting as Fed chair for Kevin Warsh, who succeeded Jerome Powell last month.
Friday 6/19
Equity and fixed-income markets are closed in observance of Juneteenth National Independence Day.
The Numbers
10 Million
The cap on Switzerland's population until 2050 if a Sunday referendum passes. Population today: 9.1 million.
$807 Billion
Amount of the most illiquid credit assets held by U.S. life insurers, 20% of their 2025 fixed-income portfolio.
53%
Percentage of U.S. families in a Reuters/Ipsos poll who fear a household member could lose their job to AI.
35 Million
The estimated number of people who migrated globally in 2023, up from 13 million a year in 2000.
Write to: Paul.Lamonica@Barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 12, 2026 22:40 ET (02:40 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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