Market poised for strong returns, concerns about overvaluation and market frothiness, AI could sustain rally

From Nasdaq: 2024-12-10 06:45:00

The S&P 500 is poised for another year of strong returns, up 29% this year after a 26.3% gain last year. Warren Buffett is selling top holdings and hoarding cash, prompting concerns about market frothiness. Valuation metrics like the Shiller P/E ratio suggest historically high levels, potentially signaling a looming bear market.

Artificial intelligence (AI) is a key factor that could determine the market’s fate next year. While past crashes were triggered by sudden collapses in specific sectors, AI-driven growth from large, profitable tech companies may sustain the current market rally. AI infrastructure spending and competition among tech giants will likely drive market performance in the near future.



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