For all the supposed anxiety about various types of economic landings, stubborn inflation amid a renewed surge in oil prices, Federal Reserve hawkishness and weak China growth, the S&P 500 SPX will still start Friday less than 2% shy of its 2023 peak.
The more relaxed bond market is reflected in equities, where the CBOE VIX VIX, a gauge of expected S&P 500 volatility, is below 13 and near its lowest since January 2020. There’s another fundamental microeconomic reason encouraging bulls: company profits. As John Butters, senior earnings analyst at FactSet notes, earnings forecasts have been improving over recent months and now the S&P 500’s aggregate third quarter earnings per share are expected to rise 0.5%.
“Investors love cash,” he says, but at 5% cash lags the year-to-date return for the S&P 500 of about 17%. “Since the SPX can continue thrive after solid returns for 1H and YTD through August, it would not surprise us to see investors put cash to work and fuel a rally into year end,” Suttmeier concludes.
The United Auto Workers union has gone on strike against Ford Motor F, -0.16%, General Motors GM, and Stellantis STLA, -0.58% as it seeks more money for its members across the sector.