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The Stock Market Rally: Is the End Near? Analysts warn of an imminent sell-off.
Last year there was a surprising stock market rally that stunned many observers. Although there was high inflation, economic tensions and rising interest rates, most experts had expected a collapse in stock prices. But the stock markets appeared unshakable; even the bankruptcy of the Silicon Valley Bank and the problems at Credit Suisse only briefly undermined confidence in the market. The Nasdaq technology exchange rose by 16 percent in January and the S&P 500 index by at least eight percent. However, this steep upward trend could soon be over if the forecasts of leading analysts are to be believed. Especially Mike...
The Stock Market Rally: Is the End Near? Analysts warn of an imminent sell-off.
Last year there was a surprising stock market rally that stunned many observers. Although there was high inflation, economic tensions and rising interest rates, most experts had expected a collapse in stock prices. But the stock markets appeared unshakable; even the bankruptcy of the Silicon Valley Bank and the problems at Credit Suisse only briefly undermined confidence in the market. The Nasdaq technology exchange rose by 16 percent in January and the S&P 500 index by at least eight percent.
However, this steep upward trend could soon be over if the forecasts of leading analysts are to be believed. In particular, Mike Wilson, top strategist at the US investment bank Morgan Stanley, predicts an imminent sell-off with a possible price drop of up to 20 percent. Other experts such as Jean Boivin and Wei Li from asset manager Blackrock predict massive drops in profits for the first quarter and warn of even bigger problems.
For Wilson, falling inflation is a red flag because it indicates weakening demand. Inflation is currently the only support for positive sales developments for many companies. If inflation continues to fall sharply, corporate profits could decline for several months.
The mood in professional investor circles seems to have already changed, as the analysis by S3 Partners shows. In March 2023, new short positions worth $44.4 billion were created, bringing the total volume of bets on a price decline to $1 trillion. The entire Wall Street seems to be preparing for a possible price crash.
However, it is not certain whether there will actually be a price crash. The short sellers positioned themselves strongly, but had to accept heavy losses in January 2023 and liquidate their short positions. By buying back the shares, they further fueled the upward trend on the stock markets, particularly in technology stocks.
The risk for short sellers therefore remains high. While current reports suggest that companies will not experience excessive profit declines or losses, it remains to be seen how the situation develops. It remains exciting to see how the market and the financial industry will develop in the coming months.
Source: https://t3n.de/news/kommen-kurs-aber-20-einbruch-1579119/
Read the source article at t3n.de