Latest news with #DataTrek
Yahoo
3 days ago
- Business
- Yahoo
The S&P 500 just hit a new record — why it could keep surging
The S&P 500 (^GSPC) just hit its first record close since early February, which means a familiar talking point is also back in the market discussion. The S&P 500's valuation is back above both the five- and 10-year averages. This is often used as a way to describe stocks as "expensive." But as we've pointed out in the past, just because valuations are high doesn't mean they can't stay high for an extended period of time. It also doesn't mean they can't keep moving higher. The chart below from Exhibit A co-founder Matt Cerminaro shows that when splitting the S&P 500 into deciles organized by least and most expensive, the current market is far less expensive than the peak of the 2021 stock boom. For instance, the average stock in the most expensive bucket is trading at a 63 times forward 12-month price-to-earnings ratio, well below the 104 times forward earnings seen back in 2021. "Price earnings multiples are a function of investor confidence, which is a constantly moving target and has very little in the way of natural limits on either the upside or downside," DataTrek co-founder Nicholas Colas wrote in a note to clients on Wednesday. The S&P 500's most recent record close comes as the market has rallied more than 23% from its April 8 bottom. Now, strategists believe the market's largest tariff fears are behind investors. Economic forecasts have once again begun reverting higher, along with projections for corporate earnings this year. And Wall Street strategists are becoming incrementally bullish on the outlook from here. No fewer than 11 Wall Street firms lowered their S&P 500 targets amid the market sell-off in April. At least eight of those have since raised their bets on where the index will end 2025. The latest was BMO Capital Markets chief investment strategist Brian Belski, who raised his year-end target to 6,700 from 6,100 on Tuesday. "The signposts we called out in April are largely in place – markets are transitioning TO 'show me' FROM 'scare me,"' Belski wrote. "We believe performance is broadening, reactions from daily rhetoric are calming, and actual corporate guidance will increase coming out of the 2Q earnings reporting period." Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
4 days ago
- Business
- Yahoo
The S&P 500 just hit a new record — why it could keep surging
The S&P 500 (^GSPC) just hit its first record close since early February, which means a familiar talking point is also back in the market discussion. The S&P 500's valuation is back above both the five- and 10-year averages. This is often used as a way to describe stocks as "expensive." But as we've pointed out in the past, just because valuations are high doesn't mean they can't stay high for an extended period of time. It also doesn't mean they can't keep moving higher. The chart below from Exhibit A co-founder Matt Cerminaro shows that when splitting the S&P 500 into deciles organized by least and most expensive, the current market is far less expensive than the peak of the 2021 stock boom. For instance, the average stock in the most expensive bucket is trading at a 63 times forward 12-month price-to-earnings ratio, well below the 104 times forward earnings seen back in 2021. "Price earnings multiples are a function of investor confidence, which is a constantly moving target and has very little in the way of natural limits on either the upside or downside," DataTrek co-founder Nicholas Colas wrote in a note to clients on Wednesday. The S&P 500's most recent record close comes as the market has rallied more than 23% from its April 8 bottom. Now, strategists believe the market's largest tariff fears are behind investors. Economic forecasts have once again begun reverting higher, along with projections for corporate earnings this year. And Wall Street strategists are becoming incrementally bullish on the outlook from here. No fewer than 11 Wall Street firms lowered their S&P 500 targets amid the market sell-off in April. At least eight of those have since raised their bets on where the index will end 2025. The latest was BMO Capital Markets chief investment strategist Brian Belski, who raised his year-end target to 6,700 from 6,100 on Tuesday. "The signposts we called out in April are largely in place – markets are transitioning TO 'show me' FROM 'scare me,"' Belski wrote. "We believe performance is broadening, reactions from daily rhetoric are calming, and actual corporate guidance will increase coming out of the 2Q earnings reporting period." Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
22-05-2025
- Automotive
- Yahoo
Elon Musk brushes off fears of Tesla's demand problem and denies declining sales — ‘they're fine, don't worry about it'
The CEO asserts he's seeing a major rebound in customer interest for his EVs despite persistent evidence to the contrary. 'The stock wouldn't be trading near all-time highs if things weren't in good shape,' he said. Tesla's return to the elite club of trillion-dollar market cap stocks is all the evidence Elon Musk needs to convince him the worst of the blowback over his political activism is over. Speaking at the Qatar Economic Forum on Tuesday, Musk dismissed concerns over weak demand as a non-issue that journalists like Bloomberg interviewer Mishal Husain may fixate on but one that bullish investors were correct to ignore. Weeks after Tesla reported deliveries tumbled 13% in the first quarter over an already weak period the year prior, Musk claimed volumes have 'already turned around'. Initially content to leave it at that, the Tesla CEO then justified his assertion after his curt, one-sentence answer failed to satisfy Husain. 'We've lost some sales perhaps on the left, but we've gained them on the right. The sales numbers at this point are strong and we see no problem with demand,' the Tesla CEO said. 'The stock wouldn't be trading near all-time highs if things weren't in good shape, they're fine, don't worry about it.' Tesla stock is expected to open up Wednesday at around $345 a share, a significant rebound from recent lows around $214 but still substantially down from its December all-time high $488 share price. Analysts have noted the stock's valuation multiple of 120x consensus 2026 earnings is first and foremost an expression of confidence in its AI and robotics plans, rather than its shrinking car business. Market researcher DataTrek calls Tesla a 'faith-based stock' as a result, since much of the premium priced in is based on immature products and services like its Optimus robot. Going into this year, the Tesla CEO raised the bar on expectations on car sales considerably. In October 2024 he predicted the brand's EV volumes would surge anywhere from 20% to 30% this year. Yet in January the company quietly dropped the goal entirely, anticipating only a 'return to growth'. Musk nonetheless repeated his claims in a separate interview with CNBC's Faber on Tuesday: 'We've seen a major rebound in demand at this point.' Barring the launch of any surprise new models the public has yet seen, evidence suggests Musk could be mistaken. Weekly data indicates the second quarter remains on track for a 24% decline in China volumes, according to the latest figures. In Europe, the picture is even more grim. Key markets like Germany saw EV demand jump by more than half in April as more customers make the switch to zero-emission driving. Yet volumes of Teslas in the country plunged 46% over the previous year. If one were to believe Musk, however, one might be convinced the exact opposite would be true. The Tesla CEO maintained its cratering sales in the region were merely a reflection of a broader consumer malaise. 'That's true of all manufacturers. There's no exceptions. The European car market is quite weak,' he told Bloomberg's Husain. This disparity between rising EV sales and drops in Tesla's suggests Tesla has a problem with demand because of Musk's political activism. The Tesla CEO's verbal assurances it does not prompted one manager to speak out recently, resulting in his termination. Troy Teslike, a Patreon account whose predictions are often more accurate than most Wall Street analysts, on Wednesday issued his latest forecast for the brand after tracking Tesla's real-time vehicle production data. He believes the company is on track to sell anywhere between 350,000 to 395,000 vehicles in Q2, another sharp decline from the 444,000 delivered last year. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
20-05-2025
- Business
- Mint
Forget the US downgrade. Here's what really matters to the market.
Investors reacted Monday morning to the U.S.'s credit rating before stocks rebounded later. A better bet is to focus on what really drives stock returns: corporate earnings. The S&P 500 was down early Monday, as investors reacted to the recent decision by Moody's to strip U.S. sovereign debt of its triple-A credit rating. They may be overreacting, While psychologically jarring, history suggests the move will have little impact on stock returns in the longer term. 'The history of U.S. sovereign debt rating agency downgrades spans +10 years and uniformly shows that these actions do not portend higher rates, recession, or lower stock prices," wrote DataTrek analyst Nicholas Colas in a note Monday. 'Over the last 20 years, 10-year Treasury yields were highest when America was AAA rated by all three agencies," Indeed, Colas noted Standard & Poor's cut its rating on U.S. debt all the way back in 2011, and Fitch did so in 2023. Neither move ultimately scared investors away from Treasury bonds, which remained capital markets ultimate safe haven. Meanwhile the S&P 500 has enjoyed one of its best stretches in recent memory. A better way to gauge where stocks are headed may simply be to focus on corporate profits. There has been cause for worry there too, noted Morgan Stanley analyst Michael J. Wilson in a Monday note, but the picture is improving. One of Wilson's preferred gauges is 'earnings revision breadth," a sentiment measure which compares the number of downward earnings revisions issued by Wall Street stock analysts to upward ones. While the earnings revision breadth measure is still bearish, it's improved dramatically in the past few weeks. Wilson notes that breadth for the S&P 500 is now at -15%, up from a low of -25% in mid-April. If that trend continues, the S&P 500 could approach its mid-February highs. 'The combination of upside momentum in revisions breadth and last week's deal with China has placed the S&P 500 firmly back in our pre-Liberation Day range of 5500-6100," Wilson wrote. 'We think continued upward progress in EPS revisions breadth back toward 0% will be needed to break through 6100 on the upside." The S&P 500 hit its all-time high of 6144 on Feb. 19 Among the sectors that have enjoyed the biggest rebounds are media and entertainment, materials, capital goods and tech hardware. By contrast, laggards with worsening outlooks include consumer durables, autos and consumer services. Citi analysts, for their part, are also bearish on consumer stocks, worrying about recent signs that spending by American consumers is slowing. On Friday, the University of Michigan reported its consumer sentiment index slipped to 50.8, its second-lowest reading in more than 40 years. 'We have been [underweight] consumer discretionary and staples stocks this year as the U.S. consumer has been in the crosshairs of tariff policy risk," analysts wrote Friday. 'A worst-case policy impact has seemingly been alleviated, yet recent signs of consumer slowing are concerning." Citi analysis recommended investors who do want to own consumer stocks pick and choose, with an emphasis on defensive names. To that end, they ran a screen hunting for individual stocks, with low cyclicality, high debt-to-capital ratios and high capital expenditures relative to deprecation. Among the names that came up: Walmart, Dollar Tree, Amazon and Procter & Gamble. Write to Ian Salisbury at
Yahoo
04-04-2025
- Business
- Yahoo
Wall Street's biggest tech bull warns of $3,500 iPhones as 'economic Armageddon' looms from Trump tariffs
During the AI boom, Wedbush analyst Dan Ives has become Wall Street's most prominent tech evangelist, offering an unrelentingly bullish view on how this new technology will usher in a Fourth Industrial Revolution. But as times change, people do, too. And in a note to clients on Friday, Ives sounded the alarm on the state of the tech trade as the reality of Trump's shock tariff announcement on Wednesday continues to sink in across the investment world. "The concept of taking the US back to the 1980's 'manufacturing days' with these tariffs is a bad science experiment that in the process will cause an economic Armageddon in our view and crush the tech trade, AI Revolution theme, and overall industry in the process," Ives wrote. How Trump and his team will pull off revitalizing US manufacturing is a debate that will dominate economic policy circles for years to come. As that years-long process plays out, however, US consumers look set to face swift and dramatic changes in the cost of some goods. Eggs have played a major role in the recent inflation discourse, and Wall Street economists on Thursday began floating the idea that the rate of inflation could double this year as a result of Trump's actions. But Ives has a simpler, and, perhaps, even more tangible warning for how these tariffs will weigh on consumers: The cost of an iPhone might triple. "The economic pain that will be brought by these tariffs are hard to describe and can essentially take the US tech industry back a decade in the process while China steamrolls ahead," Ives wrote. "50% China tariffs, 32% Taiwan tariffs would essentially cause a shut-off valve from the US tech landscape and in the process cause every electronic to go up 40%-50% for consumers, iPhones made in the US would cost $3,500 (vs. $1,000), and the AI Revolution trade would be significantly slowed down by these head scratching tariffs that NEED to be negotiated to realistic levels." (Emphasis added.) Ives also flagged an issue Nick Colas at DataTrek highlighted in a Friday morning note, too: There's a duration mismatch between US politics and Trump's manufacturing ambitions. "It will take many years for companies to shift production here, but Americans go to the polls every two years for Congress and four years for the presidency," Colas wrote. "Should newly announced trade policy cause a recession and incremental inflation, the lingering effects of both will be on voters' minds, especially in 2028," he added. In Ives' view, the cost of labor in the US makes it "unrealistic" we could ever reshore semiconductor fabrication. "If these tariffs went into place at current form overall tech earnings would come down 15% at least, the supply chain will be a Rubik's Cube rivaling Covid days, and the economy would go into a recession/stagflation," Ives wrote. Less than an hour before Ives' note hit the inbox, headlines crossed that China would slap 34% retaliatory tariffs on US imports. "We assume tariff negotiations start now otherwise dark days are ahead for tech," Ives added, "and US consumers pay the price for this ... not a debate." Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
