U.S. markets have had a scorching year, but economists are wondering how long the good times can last.
Driving the news: This month marks two years since the S&P 500 began its bull run. In mid-October 2022, the index of the 500 leading U.S. publicly traded companies bottomed out and has seen steady gains since. So far this year, it’s closed with a record high 47 times.
Yes, but: U.S. bull runs typically peter out by year three. While there are reasons to believe this one can go on past 2025 (like strong odds of the U.S. economy sticking a soft landing) experts at Goldman Sachs and Calamos Investments warn that the party could soon end.
- Recently published notes call for seriously slowing returns in the future as stocks sit at historically expensive levels and investors turn to other assets, like bonds.
- A report from Stifel, an investment bank, was even more grim, warning that the index is in the middle of a “mania” that could end with a 26% collapse next year.
Why it matters: Any end to the run would have knock-on effects at home as Canadian investors have so much exposure to U.S. stocks. Hopefully, Canada’s top index can keep its hot streak going.—QH