The Bull Market: A New Era Begins
In the fourth edition of Yahoo Finance's Chartbook, experts examine the shifting market landscape and the key trends that will shape the future.
Key Findings:
* A New Interest Rate Regime: Interest rates have risen significantly, impacting stock valuations and market sentiment.
* Tariffs and Trump: The Trump administration's trade policies are creating uncertainty and potentially raising inflation.
* Making Sense of the Bull Market: Despite economic challenges, the bull market has persisted due to strong earnings growth and low unemployment.
* The Economic Cycle Turns: The US business cycle has become less volatile, providing stability to the market.
Expert Insights:
Mike Wilson, Chief Investment Officer, Morgan Stanley: "As yields rise, the relationship between stocks and yields has reversed. Good economic data is no longer positive for stocks when yields exceed 4.5%."
Liz Ann Sonders, Chief Investment Strategist, Charles Schwab: "The recent inverse relationship between bond yields and stock prices suggests we may have exited the Great Moderation Era."
Michael Kantrowitz, Chief Investment Strategist, Piper Sandler: "We expect interest rates to matter significantly when above 4.5% or below 3.5%."
Nicolas Colas, Co-Founder, DataTrek Research: "US 10-year Treasury yields are approaching 5%. This is a critical level that has often marked the end of bull markets."
Kristy Akullian, Head of Investments, iShares Americas, BlackRock: "Investing in high-quality companies with strong balance sheets is crucial in a high rate environment."
Kathy Jones, Chief Fixed Income Strategist, Schwab Center for Financial Research: "We are experiencing the 'year of the term premium' in the bond market, reflecting uncertainty about Fed policy and the potential for higher inflation."
Gregory Daco, Chief Economist, EY: "The rising 10-year Treasury yield highlights risks related to inflation, fiscal imbalances, and investor sentiment."
Michael Gapen, Chief US Economist, Morgan Stanley: "Safe haven assets are losing their shock absorption ability due to a surge in supply and reduced demand."
UBS Asset Management's Fixed Income Investment Specialists Team: "Growing divergences in interest rate cuts will present attractive investment opportunities in fixed-income."
Kristina Hooper, Chief Global Market Strategist, Invesco: "US monetary policy is even tighter when factoring in quantitative tightening."
Ernie Tedeschi, Director of Economics, Yale Budget Lab: "Trump's trade agenda implies significant tariff increases that could have a substantial impact on the economy and consumers."
Matthew Luzzetti, Chief US Economist, Deutsche Bank: "Tariffs could raise inflation and put upward pressure on wages."
Jay Bryson, Chief Economist, Wells Fargo: "Tariffs would have a broad impact on US importers."
Michael McDonough, Chief Economist, Bloomberg: "AI-identified mentions of tariffs on earnings calls have surged."
Nancy Vanden Houten, Lead US Economist, Oxford Economics: "Trump's immigration policies will impact the labor market and potentially lead to labor shortages."
Binky Chadha, Chief Global Strategist, Deutsche Bank: "The current economic context is strong and rare. Equities remain constructive, with a year-end target for the S&P 500 of 7,000."
Venu Krishna, Head of US Equity Strategy, Barclays: "US exceptionalism has opened a valuation gap between the S&P 500 and European counterparts."
Richard Bernstein, CEO & CIO, Richard Bernstein Advisors: "We believe 2025 will be a year of returning to normal broader markets as speculation meets reduced liquidity."
Nicole Inui, Head of Equity Research for the Americas, HSBC: "The 'Magnificent Seven' has dominated equity performance, but that gap is narrowing."
Savita Subramanian, Head of US Equity and Quantitative Strategy, BofA Securities: "Labor-efficient companies have outperformed their peers."
Ben Snider, Senior Equity Strategist, Goldman Sachs: "US equity valuations are supported by the strength of the macroeconomic and corporate fundamental environment."
Eric Wallerstein, Chief Markets Strategist, Yardeni Research: "While stock market valuations are historically pricey, investors are willing to pay more for high future expected earnings growth."
Barry Bannister, Chief Equity Strategist, Stifel: "Overpaying for stocks is a case of 'near-term gratification with long-term pain.' The S&P 500 is likely to consolidate in the mid-upper-5,000s through Q3 2025 and fall off in Q4 2025."
Keith Lerner, Co-Chief Investment Officer, Truist: "Corporate earnings growth has been resilient, which has been a key pillar of market gains."