Anton Petrus/Getty Images
The stock market is headed for a disappointing few months.
Stocks are more likely to post flat or negative returns by the end of the year, two investing vets told BI.
Stock prices are already sky-high, and there’s not much that could propel them further, they said.
It’s about to be a cruel summer for investors, with the market likely to flatline or undergo a correction over the coming months, Wall Street veterans speaking with Business Insider predicted.
David Morrison, a market analyst at Trade Nation, is dubious about the latest rally in stocks, with the S&P 500 and Dow Jones Industrial Average both hovering near records following a cooler April inflation reading.
The rally in itself is problematic for stocks, he warned, as they’re already so expensive that it’s hard to imagine the market moving higher from here. He sees the benchmark index being prone to multiple sharp corrections of at least 10%, ending the year around 4,500.
“The next move will be down, rather than up,” Morrison said.
The view puts him at odds with the growing number of bulls in the market who see an eventual rate cut from the Federal Reserve as a strong positive catalyst.
However, Morrison thinks the Fed’s first rate cut could easily be postponed another three months—meaning no cut this summer or possibly no cuts at all this year. All it would take is one hot inflation reading to dash the prospect of Fed rate cuts this year altogether, he said.
“Investors are suffering from a large dose of FOMO, and I’m concerned that we could be in the process of a blow-off top with echoes of the moves seen back in early 2020,” Morrison told BI, pointing to the pandemic stock crash. “I think the air up here is quite thin. While there’s no obvious catalyst for a sell-off, it’s hard to discern what could help to lift equities much higher from here.”
Will McGough, the director of investments at Prime Capital Investment Advisors, sees the S&P 500 ending the year basically flat to where it’s currently trading. Stocks are already so expensive, and the Fed has no urgent need to lower interest…
..
