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S&P 500 Reaches All-Time High

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

·       S&P 500 has rallied over 35% since October 2022

·       Probability of March rate cuts tumble

 

S&P 500 Bull Run

New Bull Market, the S&P closed at 4839.81, nearly 1% higher than the previous all-time high of 4796.56.

Technically speaking, the bull market has started. In October 2022, there was surging inflation, the Fed was behind the curve, and many market participants expected a recession to hit in 2023.

More than one year later, those fears did not materialize.

A graph showing the price of the stock market

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Source: Yahoo Finance

 

Inflation moderated, the Fed reached its peak cycle rates, and earnings seem to rebound.

Stocks have climbed due to falling inflation, which caused investors to anticipate as many as six rate cuts this year as lower rates boost company valuations as it becomes cheaper for them and consumers to borrow, which caused a massive stock rally at the end of last year.

New Year, New Data

Bond yields have gone marginally higher since the New Year, as they plunged sharply at the end of 2023.

Last week saw a sharp rise in Treasury bond yields, a key indicator for borrowing expenses, following Federal Reserve Governor Christopher Waller’s warning against premature rate cuts.

This upward trend in yields persisted as reports on retail sales, housing starts, and unemployment claims all surpassed economists’ expectations.

The 10-year U.S. Treasury bond yield concluded the week at 4.15%, an increase from its starting point at the beginning of the year, which was 3.86%.

Some analysts rightly point out that the market might have gone ahead of itself, as the rate cuts might not materialize as quickly as the bullish investors are pricing them in.

Could it be that the equities rally due to irrational exuberance? Seems like it.

Typically, there is a saying about how January finishes, so the rest of the year will be for the financial markets.

A few data points will provide critical insights as to why we are heading for a soft landing, namely, Fourth Quarter GDP, the Fed’s Favourite Inflation Index, and Fed Meeting and Interest Rate Decision.

A graph showing the number of different colored squares

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Source: CME Fed Watch

 

Overall, Economic growth, inflation, and the Fed will continue to be the key drivers of financial markets this year.

The ideal scenario would be for inflation to moderate; this will allow the Fed to cut rates, and potentially, growth will re-accelerate.

However, market volatility seems to be a very plausible option in the near term, especially if given the likelihood that the Fed might push against rate cuts in March, which has tumbled from 73.4% to 53.8% in the course of the last three weeks.

Hence, prepare for a bumpy January and some volatility ahead.

 

Investors can long S&P 500 using our  5x US 500,  3x US 500,

Alternatively, investors can short the S&P 500 using our  -3x US 500.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

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Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

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Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.

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