The recent rally was driven by three major factors:
Lower oil prices
The preliminary US-Iran agreement raised hopes that oil exports through the Strait of Hormuz will normalise.
Brent crude fell below US$80/barrel, easing inflation concerns. �
Reuters +1
Lower inflation expectations
Cheaper energy reduces pressure on the US Federal Reserve to tighten monetary policy.
Investors are now more comfortable owning growth and technology stocks. �
Reuters +1
Risk appetite returned
The Dow closed at fresh record highs.
The S&P 500 remains near all time highs despite some profit taking in AI stocks.
Volatility has fallen from recent peaks. �
AP News +1
Is this a new bull market?
The evidence suggests the US market remains in a bull market:
Indicator
Status
Dow Jones
Record high
S&P 500
Near record high
Earnings growth
Still positive
Recession risk
Lower than feared
Oil prices
Falling
Credit markets
Stable
However, a few risks remain:
The US-Iran agreement is still preliminary and could face setbacks. �
The Guardian +1
The Fed meeting is a major near term catalyst.
Valuations, especially in AI and technology stocks, are no longer cheap.
Any rebound in oil above US$90 could revive inflation concerns.
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