It’s not just pension funds leaving the stock market. Given worries about high inflation and interest rates, investors are also swapping their stocks for cash — taking profits after the S&P 500’s banner 10% rally in the first quarter, its best start to a year since 2019. Since then, the index has dropped ~5.3%, largely influenced by underperformance in tech goliaths like Nvidia, which has fallen 15% in the past month — and “higher-for-longer” warnings could push stocks down further.
- At the start of the year, analysts believed up to six interest rate cuts could be on the table — but the Fed’s recent comments have raised fears of a potential rate hike instead.
- That’s caused anxious investors to push the 10-year Treasury yield near 5%, ushering mortgage rates above 7% for the first time in 2024.
So… buy the dip? Investment analysts from BNY Mellon suggest it’s time, viewing this as a “healthy consolidation” happening amidst a generally strong earnings season. They still anticipate the S&P 500 to reach the upper end of their 5K-5.4K year-end target range — aligning with other optimistic forecasts on Wall Street.
