The American Federal Reserve is no longer expected to set any new records on the stock market in the near future, as investors have come to realize. This realization has prompted them to place more hope in alternative sources, such as interest rate cuts by central banks in other countries or government stimulus programs.
The disappointment in the stock market has been moderate, with the S&P 500 still up over 5% since the beginning of the year. The strong performance of American companies and the hype around artificial intelligence have been supporting factors, but there is a shift in focus towards expecting real profits from these companies rather than just speculation.
The “Magnificent Seven” tech companies, responsible for the recent market highs, are facing pressure to deliver on their AI plans and show real profits. While some companies like Meta have shown positive results, there is still uncertainty around the high expectations. The market is also closely watching the Fed’s next interest rate decision and the performance of other tech giants like Alphabet and Microsoft.
The American consumer is a key factor driving the economy, but there are concerns about consumer spending slowing down and its impact on inflation. The savings rate in the USA is low, indicating that consumers are using up their savings quickly. This could lead to a slowdown in consumption and inflationary pressure in the future.
Overall, investors are navigating uncertain waters as they adjust to this new economic narrative. The Fed’s stance on interest rates and the performance of companies like Amazon and Apple will provide further insights into this trajectory. A broader foundation supports this shift towards real profits and economic fundamentals rather than speculation.
