- The market strategist team led by David Kostin continues to expect the S&P 500 to end the year modestly above its current level, but has a list of six risks for a short- to medium-term drawdown in prices.
- It starts with expensive prices, and at 16.7x earnings, the S&P 500 valuation ranks in the 86th percentile relative to the last 40 years. Other reasons include corporate buybacks: They've been highly supportive of stocks, but typically decline in the summer months.
- Then there's interest rates. Markets currently are pricing in very little chance of rate hikes this year, and thus setting themselves up for a possible hawkish surprise.
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