US Stocks Defy Odds, Reach New Milestones Amid Economic Volatility

In the face of a contentious U.S. presidential election, changing Federal Reserve policies, and potential recession threats, U.S. stocks have shown resilience and growth.

What Happened: The S&P 500 Index has recorded its third successive week of gains, with a 5.1% increase in the third quarter, marking its best start to a year since 1997. The index’s market capitalization has also crossed the $50 trillion milestone for the first time.

Surprisingly, these gains were not significantly driven by Big Tech companies. The Nasdaq 100 Index saw a modest 1.7% increase for the quarter, while the equal-weight version of the S&P 500 surged nearly 9%, reports Bloomberg.

Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, expressed her bullish outlook on stocks, predicting the S&P 500 to end this year at 6,000, a roughly 4.6% increase from Friday’s close.

This optimism is echoed by trading data from Goldman Sachs Group Inc. GS, which reveals a threefold increase in bets on information technology stocks rising than falling.

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However, concerns persist. The Fed is striving to orchestrate a soft landing following a period of swift inflation and aggressive rate hikes, and the likelihood of a recession in the next 12 months remains high, according to the New York Fed.

Despite these risks, the consensus expectations are for steady economic growth. The Atlanta Fed’s GDPNow model forecasts real gross domestic product to rise at a 3.1% annual rate in the third quarter, up from 3% in the second quarter.

Why It Matters: Investors are now shifting their focus to the coming weeks, which will bring crucial jobs reports, a wave of earnings from major US companies, the US presidential election on Nov. 5, and the Fed’s next interest-rate decision on Nov. 7. These events will undoubtedly influence the market’s trajectory and investor sentiment in the near term.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.