Hedge funds are buying these two big tech stocks while selling two rivals
Investing.com -- Yardeni Research told investors in a note Wednesday that it continues to expect the S&P 500 to reach 7000 by year-end despite mounting worries about an “AI-led Tech Wreck.”
The firm argued that fears of an AI-driven market collapse could prove to be “a no-show, too, just like the most widely anticipated recession of all time,” which investors expected for nearly four years.
The firm acknowledged that investors are increasingly concerned about an AI bubble bursting, stretched consumers, and “cracks in credit markets reminiscent of those during the Great Financial Crisis.”
Still, Yardeni Research said it is maintaining its “55% subjective probability that the S&P 500 should reach 7000 by the end of this year and 7700 by the end of next year.”
Even so, the balance of risks has shifted. Yardeni Research said it is cutting the meltup scenario probability from 25 percent to 15 percent while “raising the odds of a bearish scenario from 20% to 30%.”
The caution comes as both the S&P 500 and Nasdaq closed below their 50-day moving averages, down 4 percent and 6.4 percent from their late-October record highs.
Bitcoin’s 26.8 percent slide from its Oct. 6 peak has also spooked some technicians, though Yardeni Research said cryptocurrencies and the TQQQ “can and will probably diverge.”
The firm added that short-term sentiment indicators have weakened, with CNN’s Fear & Greed Index showing “extreme fear,” a setup that “often sets the stage for a rebound.”
Weakness on the day was compounded by a 5 percent drop in Home Depot after “disappointing Q3 results.”
Still, Yardeni Research highlighted several positives. Forward revenues for the S&P 500 Retail Composite hit a record high, the Redbook Retail Sales Index rose 6.1 percent year over year, and concerns about private-credit defaults are “unlikely to trigger another Great Financial Crisis.”