stock market

The new month of equity trading kicks off on a positive note, led by gains in Nvidia (NVDA) shares after the AI chipmaker announced its next-generation Rubin platform, set for release in 2026. However, benchmark Treasury yields are less than 20 basis points from their highest levels since early November, reflecting concerns over persistent inflation and prolonged high Fed funds rates, which are tempering stock market optimism. James Reilly, market economist at Capital Economics, observes that U.S. stocks have been navigating these alternating headwinds and tailwinds for some time. For instance, last week saw Treasury yields drop as PCE inflation data held no negative surprises, allowing nine of the eleven main S&P 500 sectors to gain ground on Thursday. Yet, the S&P 500’s progress was hindered by struggles in the information technology sector, following disappointing earnings reports from Salesforce (CRM) and Dell (DELL). Reilly highlights that “AI hype” has ultimately driven the S&P 500 to recent record highs. “What matters for IT matters for the market. And over the past year or so, that hasn’t been bond yields,” he explains. “Since late 2022, when ChatGPT was launched, AI enthusiasm has been the key driver.” Reilly expects AI to continue supporting the stock market, suggesting that narrow equity bull runs, like the current focus on Nvidia, can persist for years. He also believes the rally will broaden, noting that the early stages of the AI revolution still hold significant potential for broader gains as AI applications and leading providers become clearer. Importantly for stock market bulls, Reilly sees Treasurys providing a long-term tailwind. Recent softening economic data has led Capital Economics to lower its Q2 U.S. GDP growth forecast from an annualized 2.7% to just 1.2%. Reilly forecasts the 10-year Treasury yield to fall from around 4.5% now to 4.0% by the end of 2024, as investors may be underestimating the extent of future Fed rate cuts. “This expectation that AI hype will increase and that Treasury yields will fall underpins our forecast for the S&P 500 to hit 6,500 by the end of 2025,” concludes Reilly. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

S&P 500 Posts Strongest May Since 2020, Defying ‘Sell in May’ The S&P 500 index recorded its strongest May performance since 2020, raising hopes for a summer rally and challenging the popular “sell in May and go away” adage. “Momentum leads price, and a strong May increases the odds of a decent summer rally,” said Ed Clissold, chief strategist at Ned Davis Research, in an interview with MarketWatch. Despite macroeconomic factors like inflation, jobs data, and Federal Reserve remarks influencing market returns, Clissold noted that the current market momentum suggests a bullish trend. This rally aligns with historical patterns seen in presidential election years. The S&P 500 rose 4.8% in May, its best performance since a 5.3% rise in 2009. Historically, May averages a 0.1% decline, making it the second worst-performing month, according to Dow Jones Market Data. Since 1950, the S&P 500 has risen 77.8% of the time from April 30 to October 31 in election years, with a median gain of 3.3% during this period, the second highest in the election cycle. However, Clissold cautions that a close election could dampen the market, as clear outcomes tend to lead to better performance. The 2024 election is particularly complex, with Trump being the first former president convicted of a felony and potentially facing a rematch with Biden. The “sell in May” strategy has struggled in recent years, with the S&P 500 rising 10 out of 12 times in May since 2012 by a median of 3%. However, it’s too early to determine if this year’s trend will hold, noted Steve Sosnick, chief strategist at Interactive Brokers. “We won’t, or can’t, know if ‘Sell in May’ worked until June at the earliest,” Sosnick wrote. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com