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<ul class="summary-list"><li>US stocks traded mixed on Wednesday as traders took inflation data and the outlook for rates.</li><li>Inflation rose 0.2% for the month and 2.6% on a yearly basis, in-line with expectations.</li></ul>The latest inflation data dented some of the momentum of the post-election stock rally, with traders focusing on the latest consumer price index reading at its implications for rate cuts. The Dow Jones Industrial Average was up slightly, while the S&amp;P 500 ended the day nearly flat. Bond yields were little changed, with the 10-year Treasury yield up one basis point to 4.449%. <a target="_blank" class="" href="https://www.businessinsider.com/inflation-october-cpi-consumer-price-index-federal-reserve-interest-rates-2024-11">Inflation was slightly higher</a> year-over-year in October compared to the prior month, but was on par with economists' expectations. Consumer prices rose 0.2% for the month and 2.6% on an annual basis, higher than last month's 2.4% increase.Investors solidified bets on another rate cut at the Federal Reserve's December policy meeting. Markets see an 82% chance that the central bank will trim interest rates another quarter-point next month, up from 59% on Tuesday, according to the CME FedWatch tool.Traders are less certain about another rate cut in January. The odds of another 25 basis point cut at the Fed's January meeting have dropped to 29%, down from 69% a month ago."Inflation data mostly support another rate cut at the Fed's December decision," Bill Adams, the chief economist at Comerica Bank, said in a note. "The Fed will wait until they have more clarity about the timing and scope of policy changes from the next President and Congress before reacting to them.""The Fed wants to avoid the mistakes of the past by prematurely easing and risking a second wave of inflation, so we'd expect the FOMC to take this risk seriously," Jason Pride, the chief of investment strategy &amp; research at Glenmede, said in a note. "This doesn't take a rate cut off the table for December, but it's certainly not a slam dunk."The rally fueled by Trump's election began to stumble, with the tech-heavy Nasdaq Composite edging slightly into the red.Crypto markets, though, continued to get a boost after Elon Musk, a close ally of Trump, was appointed as co-head of the <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dogecoin-price-elon-musk-doge-department-trump-crypto-president-election-2024-11?_gl=1*j5rjww*_ga*OTI1ODIwOTQ2LjE3MTYzOTg2NjU.*_ga_E21CV80ZCZ*MTczMTUyNDI1NS41NTYuMS4xNzMxNTI0MjY2LjQ5LjAuMA..">Department of Government Efficiency</a>, or "DOGE." <a target="_blank" class="" href="https://markets.businessinsider.com/currencies/doge-usd">Dogecoin</a> spiked another 15% on the news, while <a target="_blank" class="" href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> rose as much as 6% before paring its gains, surpassing the $90,000 threshold for the first time ever before dipping back below to about $88,000 later in the day. Here's where US indexes stood at the 4:00 p.m. closing bell on Wednesday:<ul><li><a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 5,985.38, up 0.02%</li><li><a target="_blank" href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 43,958.19, up 0.11% (+47.21 points)</li><li><a target="_blank" href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq composite</a>: 19,230.74, down 0.26%</li></ul>Here's what else is going on:<ul><li>Here's what people are betting in <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/kalshi-polymarket-prediction-markets-jake-paul-mike-tyson-bitcoin-trump-2024-11?_gl=1*4l4ww*_ga*OTI1ODIwOTQ2LjE3MTYzOTg2NjU.*_ga_E21CV80ZCZ*MTczMTUxNTY1NS41NTUuMS4xNzMxNTE4NTU0LjU2LjAuMA..">prediction markets</a> now that the election is over.</li><li><a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/nvidia-stock-price-outlook-upside-blackwell-rubin-apple-iphone-moment-2024-11">Nvidia is approaching its iPhone moment</a> with its Blackwell chip, and the stock could soar another 25%, an analyst said. </li><li>Trump could push <a target="_blank" class="" href="https://www.businessinsider.com/trump-us-debt-levels-government-borrowing-treasury-blackrock-rick-rieder-2024-11">US debt to levels</a> that can't be ignored within his first year in office, according to BlackRock's Rick Rieder.</li></ul>In commodities, bonds, and crypto:<ul><li><a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">West Texas Intermediate</a> crude oil dipped 0.09% to $68.08 a barrel. <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude</a>, the international benchmark, was lower by 0.46% to $71.95 a barrel.</li><li><a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price">Gold</a> slipped 0.87% to $2,575.98 an ounce.</li><li>The 10-year Treasury yield was up one basis point to 4.449%</li><li><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> slipped to $88,615.</li></ul>

Stock market today: Indexes trade mixed as investors assess rate outlook after new inflation data

<ul class="summary-list"><li>The price of gold hit all-time highs this week.</li><li>Falling interest rates and rising geopolitical tensions boost gold's appeal as a safe haven asset.</li></ul>The price of <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/gold-price">gold</a> has soared this year.The precious metal hit a record high of $2,772 per troy ounce this week and has risen in six of the past seven weeks.With year-to-date gains of about 33%, gold returns have outpaced the broader stock market, including the tech-heavy <a target="_blank" class="" href="https://markets.businessinsider.com/index/nasdaq_100">Nasdaq 100</a>, by about 10 percentage points.And since the bull market in stocks began in October 2022, gold has outpaced equity gains, returning 67% compared to the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500's</a> return of about 63%, according to data from YCharts.Those superior returns make the metal one of the world's hottest investments.The largest gold ETF, the SPDR Gold Shares, has $78 billion in assets under management and has seen about $5 billion of inflows in the past six months, according to data from ETF.com.Physical gold is also having a moment. Costco has consistently sold out of gold bars when they become available on their website and Wells Fargo estimates that <a target="_blank" class="" href="https://www.businessinsider.com/costco-gold-bars-silver-coins-monthly-sales-wells-fargo-bullion-2024-4">Costco sells up to $200 million in gold bars</a> and silver coins to its members each month.It's been a perfect storm for the yellow metal, and the outlook suggests more gains ahead. Here's what's going on.<h3 id="5edb3548-699e-4d4d-ba18-d306c30fcf12">Demand from central banks</h3>Global central banks have been on a gold-buying spree over the past few years.According to the World Gold Council, central banks purchased a record 483 tons of gold in the first half of the year. Central banks from Turkey, India, and China topped the list of the biggest buyers.Part of the surge in demand is from countries that want to diversify their holdings away from the US dollar. "We believe that the tripling in central bank purchases since mid-2022 on fears about US financial sanctions and US sovereign debt is structural and will continue," <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-price-outlook-buy-continued-rally-next-year-2025-goldman-2024-9">Goldman Sachs said</a> in a note last month.This dynamic has been on display since Russia invaded Ukraine in 2022, as America sought to inflict maximum economic damage on Russia via sanctions. But it's harder to implement sanctions against a country that is less reliant on the dollar, and one way to be less reliant on the dollar is to buy gold.It is a dynamic that the US should be closely monitoring, according to economist Mohamed El-Erian.El-Erian wrote <a target="_blank" class="" href="https://www.ft.com/content/b5fb1e6b-bb8d-4ab5-9c92-f1f6fc40a54b?utm_source=substack&amp;utm_medium=emailhttps://www.ft.com/content/b5fb1e6b-bb8d-4ab5-9c92-f1f6fc40a54b?utm_source=substack&amp;utm_medium=email">in an op-ed for the FT</a> this week that the persistent rise in gold "captures an increasingly persistent behavioural trend among China and 'middle power' countries.""There is also interest in exploring possible alternatives to the dollar-based payments system that has been at the core of the international architecture for some 80 years."Russia has had some success with this, as it's managed to navigate its economy away from a full-fledged downturn after the US imposed wide-ranging sanctions in 2022.Russia's ability to steer its de-dollarized economy away from a crisis could give other countries confidence to lessen their dependence on the dollar, which ultimately benefits gold."What is at stake here is not just the erosion of the dollar's dominant role but also a gradual change in the operation of the global system," El-Erian said. "As it develops deeper roots, this risks materially fragmenting the global system and eroding the international influence of the dollar and the US financial system.<h3 id="8959c97e-7efe-42f8-a1a3-3fa362c5ac51">Geopolitical tensions</h3>Gold is <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-safe-haven-treasurys-us-national-debt-bofa-fiscal-expansion-2024-10">considered a safe haven asset</a> due to its long-standing history as a stable store of value.So when geopolitical tensions rise, investors tend to flock to the shiny metal, and right now, there is no shortage of reasons to be worried.From Russia's war against Ukraine to the escalating clashes in the Middle East to China's long-running threat against Taiwan's independence, geopolitical tensions are rising, not falling.What's more, soaring US debt means that Treasurys—another historical safe haven asset—might not be so risk-free anymore."Gold looks to be the last 'safe haven' asset standing, incentivising traders including central banks to increase exposure," <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-safe-haven-treasurys-us-national-debt-bofa-fiscal-expansion-2024-10">Bank of America said</a> in a note this month. <h3 id="29ec9208-7951-47bd-89c8-75f2d6320ca9">The Trump trade</h3>The <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/donald-trump-trade-rally-betting-markets-kamala-harris-bitcoin-djt-2024-10">Trump trade has picked up steam recently</a> as the former president's odds of winning the election have risen, and gold has been a big beneficiary.That's because a potential Trump presidency is expected to be accompanied by a soaring government deficit and a fast-growing pile of debt, which would further drive concerns about a rebound in inflation and the sustainability of the US dollar."If you're worried about fiscal profligacy, financial repression, and attacks on Fed independence, gold would be an attractive asset," economist Davix Oxley of Capital Economics said on Friday.Even if Trump doesn't win the election, the deficit is likely to grow, setting gold up well for more gains, according to Interactive Brokers chief strategist Steve Sosnick."It's not as though either candidate is preaching fiscal discipline, and the Fed seems willing to keep cutting even if inflation remains a bit above target. So there is a thought that gold could be a viable alternative if rates rise and the economy remains sound. And if the economy isn't sound it could still be a good store of value," Sosnick told Business Insider."<h3 id="dadb04c2-defd-4fe4-a269-2b48d277b4de">Interest rates</h3>According to data from the World Gold Council, falling interest rates have historically benefited gold prices, with the commodity rising as much as 10% in the six months after the Federal Reserve's first rate cut.With the Fed expected to cut interest rates multiple times over the next year, lower rates should serve as a tailwind for gold prices.While interest rates<a target="_blank" class="" href="https://www.businessinsider.com/mortgage-rate-increase-since-federal-reserve-cut-interest-rates-housing-2024-10"> actually jumped since the Fed's first rate cut</a> last month, with the 10-year Treasury yield hitting its highest level since July this week, gold prices have continued to rise.That's a sign that gold investors are more focused on the global interest-rate path, which is pointing lower as global central banks look poised to loosen monetary policy.The People's Bank of China cut rates by 25 basis points this week, while the Bank of Canada cut by 50 basis points. The European Central lowered rates by 25 basis points last week, and economists say they see the Bank of England <a target="_blank" class="" href="https://www.cnbc.com/2024/10/22/why-economists-see-the-uk-cutting-interest-rates-more-substantially.html">set to deliver bigger rate cuts</a> than previously expected by markets.

How gold became one of the world's hottest investments

<ul class="summary-list"><li>Rob Arnott warns of a potential bear market in the next couple of years.</li><li>He said comparisons to the dot-com peak in 2000 are fair.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/where-to-invest-inflation-recession-stock-market-trades-rob-arnott-2024-5">Rob Arnott</a> says he's usually early when calling a bull market top. So when he says the current market environment reminds him a lot of the dot-com bubble peak, it doesn't mean he thinks a significant pullback is imminent.It does mean, however, that he sees a big decline somewhere not too far off."This looks and feels like the year 2000 to me," Arnott told Business Insider on November 11. "Are we likely to see a bear market in the next two years for large-cap growth? Yeah."Arnott's comments came as the S&amp;P 500 — a large-cap index dominated by mega-cap growth firms known as the Magnificent Seven — jumped 5% within a week following the election of Donald Trump, closing above 6,000 for the first time. The explosive move was the latest advance in a torrid 66% rally that's lasted more than two years.A robust economy and excitement about artificial intelligence and business-friendly policies from the future Trump administration have propelled the market to all-time highs. But Arnott believes AI optimism, which has driven the lion's share of the rally, is already fully priced in.Those high expectations are visible in the S&amp;P 500's Shiller cyclically adjusted price-to-earnings ratio, Arnott said, which sits at levels that rival the dot-com bubble peak. At 37 times earnings, just below the late-2021 peak of 38, before the market fell by 25%, and the 2000 peak of 43, right in front of a 50% loss.<div type="image" title="s&amp;p 500 cape ratio" height="943" width="1242" msid="115360049" hostid="261" sizebytes="38380"></div>The problem with high expectations is that the results eventually have to live up to them. But a couple of factors threaten the market's bullish narrative, he said.One is that companies like Nvidia will be able to keep their 90% market share as competition rises and the cost of chips eventually comes down."If you posed the question five years ago, the presumption would have been that Intel would be the dominant player," Arnott said. "Well, Intel is teetering perilously close to irrelevance, and Nvidia wasn't on anyone's radar screen five years ago. So disruptors get disrupted."There's also the possibility that the pace of AI adoption is slower than expected, Arnott said. He said internet use in 2005 wasn't all that different from its use in 2000, but that today, things have completely changed. A longer timeline may play out for AI as well, he said.Arnott joins a long list of strategists and money managers who have recently expressed lackluster outlooks about forward return prospects, given the state of stock valuations.Goldman Sachs' Chief US Equity Strategist <a target="_blank" class="" href="https://www.businessinsider.com/sp500-outlook-next-decade-forecast-david-kostin-goldman-stocks-strategist-2024-11">David Kostin</a> made waves in October when he said the S&amp;P 500 would deliver 3% annualized returns over the next 10 years. In an interview with Business Insider, he also made a similar point to Arnott in that the valuations of some of the market's most-loved names are much higher than the rest of the pack, similar to what happened during the dot-com bubble.<div type="image" title="Goldman Sachs chart showing 10 largest stocks trading at 31x P/E compared to 19x for the rest of the market." height="730" width="882" msid="115360050" hostid="261" sizebytes="38416"></div>Bank of America's Global Chief Equity Strategist Michael Hartnett said in a client note on Friday that US stocks have outperformed relative to equities in the rest of the world to the most extreme degree in at least 75 years. Relative performance levels have reached elevated levels in prior asset bubbles like the so-called Nifty Fifty and dot-com peaks.<div type="image" title="us stocks vs rest of the world" height="669" width="1154" msid="115360043" hostid="261" sizebytes="39832"></div>While Hartnett said it's difficult to call the top in investor sentiment, the strategist known for his short-winded writing simply said: "sell hubris, buy humiliation."Like both Arnott and Hartnett say, it's hard to call the top. As short-term interest rates fall and the market-friendly policies of the Trump administration on the way, the rally could continue for months or years.But history shows there will likely eventually be cheaper times to buy into the market, said David Einhorn, founder of hedge fund Greenlight Capital, at CNBC's Delivering Alpha conference on Wednesday."This is a really, really, really pricey environment, but it doesn't necessarily make me bearish. Asset prices can trade at the wrong price and they can trade at the wrong price for a long period of time," Einhorn said. "I just observe that it's a really expensive market that if you buy and hold for a very long period of time, I doubt that this is a great — you'll look back and say this was a great entry point of all of the entry points that you could have."The way Arnott sees things, that better entry point could come in the next couple of years.

'This looks and feels like the year 2000 to me': Investing legend Rob Arnott says the stock market's record rally reminds him of the dot-com bubble peak

<ul class="summary-list"><li>Goldman Sachs and JPMorgan Asset Management are becoming a bit less bullish.</li><li>Although the US economic outlook is strong, returns may have been pulled forward.</li></ul>A pair of Wall Street juggernauts are getting slightly more skeptical about stocks and bonds, but a compelling investment opportunity may be hiding in plain sight.<div type="image" title="GS 10-year projection" height="1088" width="1508" msid="114505224" hostid="261" sizebytes="75402"></div>Goldman Sachs stole headlines recently by forecasting that <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">US equities will only rise 3% a year in the next decade</a>, down from an average annual gain of 13% in the prior 10 years. The firm's rationale is based on a more challenging backdrop characterized by lofty valuations, an unusually high concentration in the market's biggest stocks, increased recession risk, lower profits, and elevated interest rates.<div type="image" title="GS 10-year projection baseline" height="742" width="1010" msid="114505227" hostid="261" sizebytes="35320"></div>Top minds at JPMorgan Asset Management (JPMAM) agree that stocks might not post the returns that investors have come to expect, though they're not nearly as pessimistic.The firm, which manages $3.5 trillion in assets, expects US large-cap equities to appreciate by 6.7% a year in the next 10 to 15 years, according to its yearly long-term capital market assumptions report released on October 21. For reference, JPMAM thinks global stocks will rise between 7.2% and 8.1% a year in that same span.A mid-single-digit annual gain for US large caps is nothing to sneeze at, though it would be down substantially from <a target="_blank" href="https://www.businessinsider.com/how-to-invest-economy-growth-outlook-recession-risk-inflation-jpmorgan-2022-11">7.9% two years ago</a> and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stocks-bonds-real-estate-outlook-strategy-jpmorgan-2023-10">7% last year</a>.There's a simple explanation for that marginally more tepid outlook: US stocks have been on a tear. And while <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-prediction-2025-how-to-invest-rally-trader-2024-10">some bulls are emboldened</a> by the S&amp;P 500's excellent track record, JPMAM strategists worry that the market has pulled forward future gains."Near the bottom of all these pages, we put a little statement saying, "Past performance is not indicative of future returns.' That's actually not true," said David Kelly, JPMAM's chief global market strategist, at a press conference about the report. "Past great performance is indicative of a more difficult environment going forward."The S&amp;P 500 is on pace to rise by at least 10% <a target="_blank" href="https://www.macrotrends.net/2526/sp-500-historical-annual-returns">for the fifth time since 2018</a> and the 11th time since the financial crisis, including what's been a 22.7% gain in 2024. That strength, combined with already-rich valuations, led JPMAM to cut its long-term projection for US large caps.<div type="image" title="JPMAM valuations" height="926" width="1038" msid="114505230" hostid="261" sizebytes="32120"></div>However, Kelly said the downward shift was gradual since the economic growth outlook is promising. The firm is calling for US real GDP of 2% in the long term, which is the highest mark since the pandemic, along with 2.4% inflation, which is down for the third consecutive year."The very good news is that we think that the foundations for the US economy and the global economy look better than they did a year ago," Kelly said. "We got through some of our more significant worries on inflation; economic growth looks pretty solid."<div type="image" title="JPMAM US GDP forecast" height="828" width="1032" msid="114505215" hostid="261" sizebytes="15222"></div><h2 id="ee7765b8-415d-46ac-862a-90df145c611f">As the 60-40 portfolio loses steam, real estate can take the baton</h2>Lower stock returns are expected to drag down the traditional 60-40 stock-bond portfolio, which JPMAM now says should fetch 6.4% a year for the next decade or so.That forecast is down from 7% last year and 7.2% heading into 2023, though it's higher than the <a target="_blank" href="https://www.businessinsider.com/alternative-investing-strategy-60-40-portfolio-bitcoin-outlook-inflation-jpmorgan-2021-11">4.3% mark in late 2021</a>, where US large caps were only expected to climb 4.1% a year in the long term after an outstanding rebound from the early pandemic lows.Bonds, which make up the second half of that calculus, have a solid but unremarkable outlook.US bonds broadly are expected to return 4.6% in the long term — down from 5.1% last year and the same as two years ago — while the US 10-year Treasury note is projected to fetch 4.2%, versus 4.6% last year and 4% two years ago. Meanwhile, high-yield bonds should deliver a 6.1% gain in the long term, compared to 6.5% last year and 6.8% two years ago.After accounting for inflation, JPMAM expects the standard 60-40 portfolio to return less than 5% in the long term, and the same is true of large-cap stocks and bonds. While such gains may be satisfactory for some, it would take over 16 years for an investor to double their money.Those looking for a more compelling investment opportunity should consider real estate, according to JPMAM. Unlike stocks and bonds, the firm's projected returns for that asset class are steadily rising, from 5.7% two years ago to 7.5% in late 2023 to 8.1% this year.US core real estate is projected to yield close to 6%, up from just over 4% a few years ago and well above the 10-year's yield of 4.2%. Real estate isn't cheap based on <a target="_blank" href="https://www.investopedia.com/terms/c/capitalizationrate.asp">capitalization rates</a>, which measure how much money a property generates relative to its market value, but JPMAM believes the asset class is an exceptional value relative to other yield-generating investments.<div type="image" title="Real estate vs 10-year yield" height="924" width="1032" msid="114505221" hostid="261" sizebytes="34048"></div>"If you were to look at this on a spread basis, the cap-rates spread would tell you that real estate looks a little bit expensive," said David Lebovitz, a global market strategist for JPMAM, at the conference. "But if you look at the all-in yield and think of that as your valuation and your starting point, we're looking at a generational opportunity."Monica Issar, JPMorgan Private Bank's global head of multi-asset and portfolio solutions, echoed that sentiment."This is absolutely the largest generational opportunity to invest in real estate in a long time," Issar said at the conference.Commercial real estate looks especially compelling, Issar said. Unlike residential real estate, which has held up well in recent years — as evidenced by <a target="_blank" href="https://fred.stlouisfed.org/series/MSPUS">remarkably resilient home prices</a> despite <a target="_blank" href="https://www.freddiemac.com/pmms">still-elevated mortgage rates</a> — office buildings have struggled to regain their value since the pandemic ushered in a new era of remote work for millions of Americans.As companies reduced their physical presence or eschewed offices altogether, demand for commercial spaces has taken a massive hit. However, Issar thinks that risk is reflected in prices."All we've been reading about and all we've been seeing is price declines and discussions about empty buildings," Issar said. "This is a time for investors to step in, move into attractive pricing, move into asset classes like non-core real estate."Investors can bet on a commercial real estate rebound by working with <a target="_blank" href="https://am.jpmorgan.com/us/en/asset-management/institutional/investment-strategies/alternatives/real-estate/">JPMAM's team</a>, or on their own through publicly traded real estate investment trusts (REITs). JPMAM didn't outline any specific investments to make, but Issar threw out a few ideas to help investors brainstorm."Think of multifamily housing; think of student housing around campuses; think of cell towers and data centers," Issar said. "That is the modernization of the new direct real estate that is going to be really attractive for investors in the future."

'Generational opportunity': Invest in real estate as stock and bond returns shrink, according to $3.5 trillion JPMorgan Asset Management

<ul class="summary-list"><li>The S&amp;P 500 is in for a 5% drop, according to CFRA's Sam Stovall.</li><li>The veteran strategist warned of a veteran backdrop for stocks.</li></ul>The stock market is in for a correction, as a trio of unfavorable factors will weigh on equity prices, according to Sam Stovall, chief investment strategist of CFRA Research.The Wall Street veteran pointed to the strong performance of stocks so far this year, with the S&amp;P 500 up 15% in 2024. However, the benchmark index is <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-spx-index-stovall-crash-recession-warning-tech-2024-6">poised to dip 5%</a>, he predicted, thanks to the bearish setup in interest rates, inflation, and stock valuations.Inflation is declining but is still above the Federal Reserve's 2% target, leading central bankers to project just one rate cut by the end of the year. Higher rates have triggered the longest-ever inversion of the 2-10 Treasury <a target="_blank" href="https://www.businessinsider.com/recession-indicator-economy-inverted-yield-curve-campbell-harvey-fed-unemployment-2024-6">yield curve</a>, the bond market's famous gauge of a coming recession. The indicator, which flashes when the 2-year yield surpasses the 10-year yield, has been a reliable recession signal throughout history, and economists have said that this time likely won't be different.Stock valuations are also high by historical standards, which hints at future downside. The S&amp;P 500 is priced at a 32% premium compared to its average price-to-earnings ratio over the last 20 years, Stovall noted. Tech stocks, which have dominated the market in recent years, are trading at a 68% premium. "I think we're really stretched and we got to see some upward revisions to earnings estimates, I think, in order to justify that," Stovall said in a recent interview with <a target="_blank" href="https://www.youtube.com/watch?v=mV0zSB4kBIE">CNBC</a>.Stocks could see their first "crack in the ice" in the tech sector, he added, pointing to lofty valuations among mega-cap tech stocks."It's only been tech that's been outperforming the market. I sort of feel this is a jumbo jet that's flying on one engine, and you wonder how long it will stay aloft," he warned.Other forecasters have warned of limited upside to the market as stocks — particularly tech stocks — continue to climb higher. According to one valuation metric, the stock market looks to be the most overvalued since 1929, which could pave the way to a <a target="_blank" href="https://www.businessinsider.com/stock-market-crash-sp500-outlook-bubble-risks-valuations-indicators-hussman-2024-3">steep correction</a>, elite investor John Hussman warned.

A stock market correction is coming as rates, inflation, and valuations darken the outlook for investors, strategist says

<ul class="summary-list"><li>Evercore ISI expects a 10% surge in the stock market by year-end, driven by AI growth.</li><li>The firm raised its year-end S&amp;P 500 target to 6,000 and said the index could hit 7,000 by 2025. </li></ul>The stock market is poised surge another 10% by the end of the year, according to a new forecast from Evercore ISI.Evercore strategist and managing director Julian Emanuel increased his year-end <a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> price target to a new high on Wall Street at 6,000 in a note on Sunday.Emanuel had previously had a year-end price target of 4,750.According to the note, the "AI revolution is in the early innings" and that should lead to continued strength in earnings growth. Emanuel forecasts S&amp;P 500 EPS growth of 8% and 5% in 2024 and 2025, respectively."The pandemic changed everything. Record stimulus, elevated household cash balances and low leverage support the consumer. Then came AI. Today, Gen AI's productivity potential in every job and sector is inflecting. The backdrop of slowing inflation, a Fed intent on cutting rates and steady growth have supported Goldilocks," Emanuel said.The S&amp;P 500 trading at 6,000 would imply a 25x trailing 12-month price-to-earnings multiple based on Emanuel's EPS estimate of $238 per share.While that valuation multiple is extended on a historical basis, it's still well below the dot-com bubble peak of 28x earnings."High multiples are supported by companies' proven record of managing costs and maintaining/growing margins," Emanuel explained.If the high valuation multiples persist, the S&amp;P 500 could rise 31% to 7,000 by the end of 2025."A simply time/price extrapolation of prior periods when valuations were as high as they are today could point to S&amp;P 500 at 7,000 by 4Q25/1Q26," Emanuel said.Along with the S&amp;P 500 price target boost, Evercore ISI upgraded the technology sector to "Outperform" from "In Line" based on aging demographics and the growing adoption of AI technologies."The sector is highly exposed to enabling and adopting Generative AI's productivity potential. It also stands to benefit from structural demographic trends as corporates invest in productivity as societies age and labor markets tighten over the long run," Emanuel explained.That thinking echoes sentiments from Fundstrat's Tom Lee, w<a target="_blank" href="https://markets.businessinsider.com/news/stocks/technology-stocks-sp500-share-outlook-labor-shortage-ai-productivity-boom-2024-5#:~:text=A%20global%20labor%20shortage%20of%20about%2080%20million%20workers%20by,benchmark%20index%20of%20around%2030%25.">ho expects a massive 10-year bull market driven by the adoption of AI technologies</a> to address a lingering labor shortage.Finally, Emanuel said that in his bull case scenario, in which investors <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-bubble-warning-signs-signals-ai-stocks-earnings-profits-2024-6?utm_medium=ingest&amp;utm_source=markets">revisit dot-com bubble-levels of exuberance,</a> the S&amp;P 500 could soar to 6,500 by the end of 2024."Stocks are a long way from 'Bubble territory' but rapid gains, and abundant liquidity while earnings rise could 'inflate' — to 6,500," Emanuel said.

Evercore ISI upgrades its S&P 500 outlook to the highest on Wall Street as it says the AI revolution is just getting started

<ul class="summary-list"><li>Disney's stock rose 8% Thursday after upbeat earnings and a rare three-year guidance update. </li><li>The company beat estimates for revenue and earnings-per-share. </li></ul><a target="_blank" class="" href="https://markets.businessinsider.com/stocks/dis-stock">Disney</a> stock shot up 8% on Thursday after the entertainment giant reported earnings that beat estimates and surprised investors with guidance that gave a strong outlook for the next three years. The stock traded 8.4% higher around 10:45 a.m. ET, at $111.05 a share.The company beat revenue estimates for the third quarter, reporting $22.57 billion, versus estimates of $22.45 billion. Earnings per share came in at $1.14 versus estimates of $1.10.The outlook provided to investors was also a big highlight of the report. The guidance update is rare for Disney, which usually doesn't provide forward earnings forecasts. The three-year timeframe is also significant, since most companies rarely make forecasts further out than one year, and many don't provide guidance at all. The company forecasts high single-digit earnings-per-share growth for the next fiscal year and an $875 million increase in operating income for its streaming division. For the 2026 and 2027 fiscal years, the company projects double-digit earnings growth."Thanks to the significant progress we've made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future," CEO Bob Iger said in a statement.The company's streaming unit—which includes <a target="_blank" href="https://www.businessinsider.com/guides/tech/disney-plus-price">Disney+</a>, ESPN+, and Hulu—saw a quarterly profit of $321 million, far outpacing a loss of $387 the year prior.The profits follow years of heavy investment amid a tense <a target="_blank" href="https://www.businessinsider.com/netflix-earnings-winning-streaming-wars-not-even-close-2024-1">streaming war</a> with competitors like <a target="_blank" href="https://www.businessinsider.com/netflix-wins-streaming-wars-this-chart-shows-why-2024-1">Netflix</a>, Max, and Paramount+.Its TV networks, meanwhile, comprised of ABC and cable channels like the Disney Channel and Freeform, saw profits fall 38% to $498 million, while revenue dropped 6% to $2.5 billion.The company's theme park and cruise profits also slowed, falling 6% from the year before to an operating income of $1.66 billion amid rising costs after launching two <a target="_blank" href="https://www.businessinsider.com/disney-cruise-line-expanding-new-ships-private-destination-2024-8">new cruise ships</a>, plus slowing foot traffic at international parks like Disneyland Paris.Spending and attendance at US parks remained strong, though, the company said.Bank of America analysts maintained their bullish outlook for the stock following the report. They reiterated their "buy" rating and $120 price target, which would represent almost 8% upside from current levels. "DIS has a collection of best-in-class premiere assets (in content/IP as well as Theme Parks). Near term catalysts include: 1) profitability inflection in DTC and 2) reacceleration in parks business," Bank of America analyst Jessica Reif Ehrlich wrote in a note.

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