US stock positioning slips slightly after reaching record highs, potential short-term pullback foreseen

From Investing.com: 2024-12-09 05:37:35

US equity futures positioning has slightly declined after reaching record highs, according to RBC Capital Markets, citing CFTC futures data. This trend is reflected in key equity contracts such as the S&P 500, Nasdaq, and Dow Jones.

Positioning recently hit a new all-time high, surpassing previous peaks seen in late 2017 and early 2018, particularly in January 2018. The earlier peak followed a strong 19% annual gain in the S&P 500 in 2017, largely driven by enthusiasm over the December tax cut bill.

RBC strategists question whether US equities have already pre-traded some political tailwinds expected by investors for 2025. The latest CFTC data points to potential concerns for the equity market, adding to the case for a possible short-term pullback.

Consensus forecasts for 2025 real GDP have risen to 2.1%, driven by stronger expectations for first-quarter economic growth. This positive signal for the market is offset partly by an uptick in consensus projections for Fed Funds and Treasury yields.

While GDP growth forecasts in the 2.1-3% range are supportive of stronger stock market returns, growth in the 1.1-2% range is associated with weaker performance. RBC’s analysis suggests that higher rates negatively impact stock market valuations, pressuring trailing P/E multiples for the S&P 500.



Read more at Investing.com: US stock positioning slips; some investors see big pullback: RBC By Investing.com