Goldman Sachs The Markets
What could drive the S&P 500 even higher?
Jun 21, 2024
John Flood, Head of Americas Equities Sales Trading in Global Banking & Markets, discusses the surge in the S&P 500 driven by diverse investor cohorts and strategies. Analysis covers market concentration, valuations, sector rotations, and predictions of the S&P 500 exceeding 6,000, along with insights on the upcoming Russell Rebalance event.
09:25
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Quick takeaways
- Various market participants are driving the S&P 500 rally, including hedge funds focusing on AI and GLP-1 plays, mutual funds rushing in with funds, retail investors returning, and corporates engaging in record repurchases.
- The market rally is concentrated on five stocks contributing to 60% of the S&P 500's return, with a collective emphasis on technology and GLP-1, while concerns exist about valuations and earnings, reminiscent of 1995 rather than 1999.
Deep dives
Market Rally Boosted by Various Investor Cohorts
The S&P 500 has surged over 15% this year, hitting more than 30 all-time closing highs. Hedge funds, mutual funds, retail investors, and corporates are actively participating in the market, driving the momentum. Hedge funds are focused on AI and GLP-1 plays, while mutual funds rush in with funds due to size limitations on big stocks. Retail investors are back in the game, and corporates are engaging in record repurchases, providing strong support.
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