Wall St Week Ahead Lofty valuations on US stocks a growing worry for investors

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Some Wall Street banks are sounding caution on the U.S. stock rally, warning that stretched valuations have made equities more vulnerable to declines.

for the week though it is up more than 13% since the year began, fueled by signs of moderating inflation, excitement over advances in artificial intelligence and growing appetite for risk.

"With valuations now pushing the outer limits of what we would think would be reasonable. ... We would be taking some chips off the table," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute . The earnings outlook for the high-growth companies that make up the Nasdaq 100 is more tepid than in 2021, when the index also rallied sharply, making it more challenging to justify high valuations, said Michael Purves, chief executive officer at Tallbacken Capital Advisors.

Investors next week will be watching for more data on the economy's health, including key inflation data on Friday, as the second quarter comes to an end.

 

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