Markets are 'getting close' to being priced to perfection

Yahoo

21-07-2025

Yahoo Finance Executive Editor Brian Sozzi examines whether the market is priced to perfection and discusses the risks ahead that could threaten stocks' high valuation. Baird Investment strategist Ross Mayfield, IG North America Interim CEO Pete Mulmat, and Senior Reporter Allie Canal discuss.
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All right, it's time now for our question of the day. Is the market priced for perfection? I want to put the pressure on our group here. Ross, I'm gonna start with you. A market could stay priced for perfection for a long period of time. I would argue I could ask this question six months ago and we probably would have said it was priced for perfection. Is it priced for perfection now and how long can it stay at these levels when we're looking at a Fed meeting next week, we're looking at an August 1st tariff deadline. There are some real potential negative shocks coming to this market.
Yeah, you're absolutely right. I would say not priced to perfection, but priced for very, very good. I mean, you know, you have a forward multiple that's approaching at, you know, 2021 levels, but only, you know, expecting, you know, the S&P 9-ish percent growth for 2025. So that's not crazy. That's not something that's undeliverable. So I think you're priced for very good. You mentioned there's a lot of kind of potential headwinds or catalyst out there. That could cause some near-term pain. We've had this big run-up, usually you have to consolidate a move like that, maybe let the earnings and the fundamentals kind of catch up to price. But the other thing is the move we've seen, that breadth, that momentum, the kind of global and cyclical nature of this move, usually those portend pretty strong returns six, 12 months out. So I think that near term, you could see some chop, you could see, you know, even a bit of a correction here. But it's priced for very good and I think it's going to be able to deliver on that.
Uh, Pete, Ross has set you up for a big correction call here on Yahoo Finance. Tell me that the S&P 500 is going to lose 10 to 15% over the next two weeks. Come on, the floor is yours.
Oh, it's going to zero. No, no, he has, he has set me up wonderfully. You know what? I think we are getting close to that, uh, that perfection in terms of rates will be flat or lower. Tariffs have not been impactful, nor will they be in the future. I think we're at a point right now where, um, and you made a great point that these runs tend to last longer than anybody expects. And I agree with you on that. But I think we, we are in that mode that, um, bad news is good news and good news is good news, and that can change. Whether we've got another two, three percent to the upside, but I would imagine by the fall we'll be seeing this market trading lower.
Ali, last word to you. This has been an unshakeable market. Tariffs, tariff headlines really haven't taken the market down. Even companies that have reported squishy earnings. I'll put Domino's results into this morning. I mean, they missed badly on earnings, but the stock's up on a US same store sales figure and some stuffed crust pizza results. I mean, give me a break. I mean, it's hard to figure out if tariffs are going to take this market down, what will?
I think it's going to be disappointment on the earnings front, especially for a big company like Nvidia. I think that is the biggest risk in the near term. But we are in a bull market, and I think looking ahead, it's all about artificial intelligence. We are still in the early innings of AI. If you look back in history at any other bull market, there is always that innovation. And this time around, it's AI. And we haven't even scratched the surface when it comes to some of those productivity gains there, too. So overall, I think we are going to see this market chug along higher. But as we've been discussing, there are still near-term risks. We could see some chop, some volatility, in particular when it comes to the interest rate path. I think we're going to be priced out of that for this year. I think we're going to see those cuts not until 2026. How the market takes that is a big TBD. But I think if we continue to see economic data coming strong, if earnings coming strong, then we're at a solid place in this market.