Regardless of interest rate hikes or cuts, and whether the US dollar strengthens or weakens, it seems that the S&P 500 never lacks upward momentum, and the market is filled with optimistic sentiment. After the rate cut, the price of long-term Treasury bonds continued to fall, with the 20-year Treasury rate rising to 4.2%. Compared to the bond market, capital is more willing to stay in the stock market.
The issue is that the S&P 500's net profit growth in the last two years has been less than 10%, while prices have soared by 60%, causing stock prices to move away from their actual value. Unless AI can bring significant profit growth in the short term, the risk will not be released.
The price-to-earnings ratio (PE) of the S&P 500 has approached 30 times, a level it has not reached since the pandemic and the internet bubble era.
Comments