Latest news with #SP500
Yahoo
2 hours ago
- Business
- Yahoo
S&P 500 Bulls Roar as UBS Lifts Targets and EPS Estimates
June 27 - UBS has raised its year-end S&P 500 target to 6,200 and set a mid-2026 goal of 6,500. The strategists also raised their S&P 500 2025 EPS forecast to $265, implying about 6% growth, and bumped the 2026 estimate to $285, or roughly 7.5%. They said easing U.S.-China trade tensions and a tax-and-spending package in Congress should bolster corporate cash flows. Analysts at UBS expect the upcoming Q2 earnings season to hold up well, even as tariffs linger. They noted most large-cap firms have weathered earlier levies without major damage. UBS flagged potential volatility around the expiration of President Trump's reciprocal duties next month. They warned that goods hit by existing tariffs could push inflation higher and slow growth if costs pass through to consumers. The bank prefers communication services, financials, health care, information technology and utilities, citing their resilience and cash-flow strength. With the S&P near its all-time high, investors will be watching management commentary and guidance closely. The path for U.S. equities now hinges on tariff developments and second-quarter results. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
2 hours ago
- Business
- Yahoo
S&P 500 Bulls Roar as UBS Lifts Targets and EPS Estimates
June 27 - UBS has raised its year-end S&P 500 target to 6,200 and set a mid-2026 goal of 6,500. The strategists also raised their S&P 500 2025 EPS forecast to $265, implying about 6% growth, and bumped the 2026 estimate to $285, or roughly 7.5%. They said easing U.S.-China trade tensions and a tax-and-spending package in Congress should bolster corporate cash flows. Analysts at UBS expect the upcoming Q2 earnings season to hold up well, even as tariffs linger. They noted most large-cap firms have weathered earlier levies without major damage. UBS flagged potential volatility around the expiration of President Trump's reciprocal duties next month. They warned that goods hit by existing tariffs could push inflation higher and slow growth if costs pass through to consumers. The bank prefers communication services, financials, health care, information technology and utilities, citing their resilience and cash-flow strength. With the S&P near its all-time high, investors will be watching management commentary and guidance closely. The path for U.S. equities now hinges on tariff developments and second-quarter results. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
3 hours ago
- Business
- Yahoo
Monitoring The Cape Ratio: Are Stocks Overvalued or Will the Bull Run Continue?
Amid a historic rebound, the S&P 500 has hit another all-time high after flirting with correction territory just three months ago in March. With the S&P 500 dropping more than 10% in March from its previous high of 6,144 in February, the benchmark has now rebounded and hit a new peak of over 6,180 on Friday. Such a fast recoup in the broader market is unprecedented and can sometimes take years. That said, it's certainly a worthy topic of whether stocks are overvalued or if there is indeed a clear path for a Bull market to continue. To do so, let's take a look at the Cape ratio, also known as the Shiller P/E ratio, and review the bullish sentiment that's lifting markets. Notably, the Cape ratio is used to calculate the price of the stock market or individual stocks relative to their average inflation-adjusted earnings over the last 10 years. Keeping this in mind, the Cape ratio smooths out fluctuations caused by economic cycles, providing a clearer view of whether stocks are overvalued or undervalued based on their historical average. Preluding the market correction earlier in the year, many analysts, including famed billionaire Jeffrey Gundlach, had called for a market recalibration based on the Cape ratio's reading of 38X earnings on the benchmark S&P 500, the second-highest level ever. This Clinically Adjusted Price-to-Earnings Ratio (CAPE) has roots that date back to 1934, when David Dodd and Warren Buffett's mentor Benjamin Graham proposed smoothing out earnings over multiple years in their investment book 'Security Analysis', which provided a foundational idea behind CAPE. Retroactively calculating historical earnings data for the U.S. stock market back to 1881, the Cape ratio was formally introduced by economists Robert Shiller and John Y. Campbell in 1988. Furthermore, the Cape ratio gained notoriety in the late 1990s and early 2000s, thanks to Shiller's warning of the dot-com bubble. Following the broader market's most recent and historical rebound, the Cape ratio on the S&P 500 is currently at 36X, which is once again well above its historical average of around 16-17X. Image Source: YCHARTS Despite the Cape ratio indicating stocks are overvalued, a clearer path to global economic growth has been established with the U.S. officially reaching a framework trade deal agreement with China on Friday. President Trump's 10% baseline tariff on most countries is set to expire on July 8, but has eased concerns that rattled the stock market, providing a 90-day pause on higher imposed country-specific tariffs. While this deadline is just a few weeks away, Treasury Secretary Scott Bessent has advised that most trade deals should be done by Labor Day (Monday, September 1st). Allowing more time for negotiations, the U.S. has come to a trade agreement with the U.K. as well and is in talks with other major trading partners, including the E.U., India, and Japan. Optimistically, May's jobs report and inflation data added fuel to the market rebound earlier in the month after coming in better than economists' expectations. Meanwhile, reports of an Israel-Iran truce were able to sustain this optimism, although it's noteworthy that President Trump has just gone on the record and said he is terminating trade talks with Canada at the time of this writing. While overly bullish market sentiment can sometimes be questioned as a conundrum, investors should know that this usually preludes to higher corporate earnings, the general principle that manifests in a higher stock market. Over the last decade, the earnings from the companies in the S&P 500 have grown by over 9% annually, with the index up a bullish +200% during this period. Image Source: Zacks Investment Research Considering the stock market needs higher EPS figures to ease the Cape ratio's overhyped reading, it's noteworthy that Zacks director Sheraz Mian has pointed out that S&P 500 earnings for the second quarter are currently expected to be up +4.9% from the same period last year on +3.9% higher revenues. However, Mian also points out that while negative revisions to Q2 estimates have stabilized in recent weeks, tariff uncertainty has caused estimates for the period to be under significant pressure relative to other recent periods. Inherently, for the bull run to continue, a relatively strong Q2 earnings season and better-than-expected corporate guidance will be crucial, with the Cape ratio at a very high 36X. This may certainly be the case with the S&P 500 already hitting a new all-time peak after rebounding +10% in just three months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
5 hours ago
- Business
- Yahoo
S&P 500 ETFs to Tap as Market Optimism Builds Up?
The S&P 500 is hovering around its all-time high, and optimism is rising among Wall Street's analysts. One notable figure, Brian Belski, Chief Investment Strategist at BMO Capital Markets, believes the index has much more room to climb this year, as quoted on Yahoo Finance. This puts focus on SPDR S&P 500 ETF Trust SPY, Vanguard S&P 500 ETF VOO and iShares Core S&P 500 ETF IVV. These ETFs have gained about 4.6% so far this year (as of June 26, 2025). Belski has revised this year-end target for the S&P 500 to 6,700, up from his previous forecast of 6,100. Earlier this year, he had lowered his outlook amid heightened tariff tensions that rattled markets in April. However, with those fears fading, Belski now offers a more optimistic view. According to Belski, the market environment is shifting. He emphasized that market performance is broadening, investor reactions are stabilizing, and corporate guidance is expected to become more transparent after the second-quarter earnings season. Belski's bullish stance is part of a broader trend. Many analysts who had slashed their forecasts in April are now reversing course. While 11 Wall Street firms reduced their S&P 500 targets during the spring sell-off, at least eight have since raised their projections, as quoted on Yahoo Finance. Economic indicators and corporate earnings forecasts are also rebounding. The U.S. economy contracted at an annualized rate of 0.2% in Q1 2025, a slight improvement from the initial estimate of a 0.3% decline. The University of Michigan's consumer sentiment index for the United States rose to 60.5 in June 2025 from a near-record low of 52.2 in both May and April, and well above market expectations of 53.5, according to preliminary estimates. Belski highlighted that estimates for key sectors, including Communication Services, Consumer Discretionary, Information Technology and especially Financials, have room to recover further. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors. Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, accounting for more than 50% of all index earnings, have also been cut since the quarter got underway. But the revisions trend for the Tech sector has notably stabilized in recent weeks. Belski acknowledged that his April 9 downgrade came before President Trump's major tariff delay announcements. At that time, maintaining a target 30% above the S&P's actual level seemed 'not thoughtful.' However, with the effective U.S. tariff rate falling from over 25% to around 14% (according to the Yale Budget Lab), investor sentiment has shifted sharply. As trade tensions eased, several defensive strategies from April—including the 'Sell America' trade—began to unwind. Hence, along with many analysts, we believe this could be a good time to buy S&P 500 ETFs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P 500 ETF (SPY): ETF Research Reports Vanguard S&P 500 ETF (VOO): ETF Research Reports iShares Core S&P 500 ETF (IVV): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research 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
Yahoo
5 hours ago
- Business
- Yahoo
The S&P 500 has retaken all-time highs. Here's how much European and Chinese stocks raced ahead while U.S. markets regained lost ground
U.S. stocks have completed a massive round trip, with the S&P 500 returning back to where it was about four months ago. That's after an epic selloff triggered by President Donald Trump's steeper-than-expected tariffs, which have since been put on hold. Meanwhile, stocks in Europe and China have soared as investors turned away from 'American exceptionalism.' The S&P 500 retook the all-time high set on Feb. 19 and surpassed it on Friday, completing a massive roundtrip that saw U.S. stocks crash on President Donald Trump's trade war then claw their way back a few months later. But while investors can feel whole again after witnessing their portfolios get obliterated, there's also lingering regret over what they missed out on—or what could have been. For example, where would the S&P 500 be today if Trump hadn't shocked Wall Street with much steeper than expected tariffs that sent it crashing nearly 20%? At the end of 2024, many Wall Street forecasters expected the broad market index to soar to 7,000 this year or finish just below that threshold, building on two straight years with gains of more than 20% each. Back then, the notion of continued 'American exceptionalism' in the global economy and financial markets remained the dominant narrative, as investors focused more on Trump's tax cuts and deregulation than his tariffs. That contrasted with views for more stagnation in Europe and further slowing in China. Fast-forward to today, and the script has flipped. Investors plowed capital into overseas markets, especially after 'Liberation Day' in early April. The U.S. Dollar Index is down 10% this year as investors no longer see America as exceptional and doubt the safe-haven status of the greenback. Meanwhile, Europe and China are looking for ways to boost growth and offset an expected drag from weaker exports to the U.S. Europe is eyeing ways to deregulate and plans a big dose of fiscal stimulus in the form of more defense spending. That's as NATO allies rush to rearm amid Trump's demands for more burden-sharing, fears of Russian aggression, and doubts about the U.S. security shield. China, the top target of Trump's trade war, has also unleashed more fiscal stimulus and vowed increased support for consumers as Beijing seeks to shift its economy more toward domestic demand and away from export-oriented growth. At the same time, China's gains in AI, as demonstrated by DeepSeek's stunning advances, have added to the bullishness. Those policy pivots have fueled stock rallies that are largely beating U.S. markets, meaning investors who shunned Europe and China missed out on big gains. The DAX stock market index in Germany is up 20% year to date, and the MSCI Europe stock index has surged 21%. Other European indexes have made more modest gains but still are outperforming the U.S., with the FTSE 100 up 8%. In China, Hong Kong's Hang Seng Index is up 21% this year, and the iShares MSCI China ETF is up 18%. (But the Shanghai index has only eked out a 2% gain so far in 2025.) For its part, the S&P 500 is now ahead 5% this year. That's after Trump put his most aggressive tariff rates on hold and reached trade deals with the U.K. and China. Meanwhile, corporate earnings held up, inflation readings didn't spike, and some Federal Reserve policymakers pushed for earlier rate cuts. But the U.S. stock market recovery is built on hope as much as actual results. Investors are hoping the trade war doesn't escalate again, inflation stays in check, earnings can power through, and the economy doesn't tip into a recession—not to mention containing tension in the Middle East. To be sure, it's still possible for the S&P 500 to reach those upbeat forecasts that Wall Street saw before Trump's trade war. But the key question for investors is whether U.S. stocks can return to long-term outperformance over other markets. This story was originally featured on Sign in to access your portfolio
