Looks like Wednesday will see Wall Street open a touch softer. As next week’s inflation data and Fed decision loom, it seems the rally has stalled. But at least it’s stalled above 4,200 for the S&P 500 SPX.
Well, in a new note, a group of Goldman Sachs equity strategists, led by Ryan Hammond and David Kostin, set out to quantify the impact AI will have on business and by extension the stock market. But more than that, AI may raise U.S. overall labor productivity growth by 1.5 percentage points over a 10-year period as it frees up workers to other productive activities and those workers displaced by AI automation are re-employed in the new AI-infused economy.
That’s great, however there are other factors to consider; notably the difficulty in extrapolating nascent adoption of a transformational technology and how much S&P 500 companies will actually be able to capture these profits. Goldman also notes that even if the optimistic scenario for earnings does come to pass, it would unlikely protect the market from concerns about an economic downturn. Productivity growth usually explains only a small portion of S&P 500 returns.
The buzz China’s exports fell by 7.5% in May compared to the year before. That’s much worse than the decline of 1% expected and, along with news of imports dropping 4.5%, painted a concerning picture of global demand.
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