"What they're saying: "None of the other issues that have been 'bothering' the market are resolved yet," Peter Tchir, head of macro strategies at Academy Securities, wrote in his latest research note. "The potential for pAIn seems real." (Yes, he capitalized AI on purpose here.) An end to the shutdown won't "solve all the stock market's problems as issues like stretched valuations, the peak in earnings sentiment and AI jitters would remain," RBC Capital Markets' head of U.S. equity strategy,"
"Lori Calvasina, wrote in a note to clients. Zoom out: Company earnings are usually the main driver for the stock market, but earnings sentiment "peaked over the summer" Calvasina noted. While upward revisions to earnings estimates rose to 59.6% for the S&P 500 and 56.2% for the Russell 2000 last week, both remain below their August highs. Yes, but: A reopening of the government would be a positive. The shutdown's length turned it from "background noise to real economic worry,""
Multiple unresolved market risks persist, including stretched valuations, a peak in earnings sentiment, and concerns about AI-driven speculation. Observers note that none of the other issues troubling the market are resolved and that the potential for pAIn seems real. An end to the government shutdown would be positive but would not solve all stock market problems. Company earnings usually drive the market, and earnings sentiment peaked over the summer; upward revisions rose recently but remain below August highs. The shutdown has shaved about 0.8% off quarterly GDP and roughly $55 billion in lost output. Focus will return to economic data for Federal Reserve clues and to ongoing worries about a potential AI bubble.
Read at Axios
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