A revitalized 2023 stock-market rally finally ran out of fizz last week. And it might take some time to get back on track in the face of a dip in market liquidity and signs that a surge of buying fueled by “fear of missing out” has largely run its course.
“We don’t think the rally is over, but it may be difficult” for it to proceed in coming weeks “with liquidity coming out of the system,” said Michael Arone, chief investment strategist for the U.S. SPDR Business at State Street Global Advisors, in a phone interview.The S&P 500 index SPX fell 1.4% last week, ending a streak of five consecutive weekly gains after settling at a 14-month high alongside the Nasdaq Composite COMP on June 15. The Nasdaq pulled back 1.
Need to Know: The AI boom will stay with the S&P 500, says one of most pessimistic Wall Street firms heading into 2023 The S&P 500 rally has come alongside improving macro fundamentals, Roberts said. The gains, however, have outpaced the improvement by the macro backdrop, likely a result of that catch-up buying, much of which appears to have run its course, Roberts said.
See: Economist who anticipated bank failures this spring says U.S. recession may be just around the corner State Street sees room for stocks to extend the rally later this year, but expects a bumpier path in the near term.