Historic S&P 500 Surge Faces Fed Doubts and Overvaluation Warnings

1. S&P 500 Increases More Than 7% Over 6 Days in a Row 2. Experts Warn of Overvaluation and Trade Tensions [Unblock Media] The S&P 500 is providing hope among investors, experiencing a rare increase for six consecutive days. Historical patterns suggest continued rises, but experts warn that overvaluation and ongoing trade tensions could stifle this uptrend. The U.S. stock market is currently signaling a rise. According to Ryan Detrick, chief market strategist at the Carson Group, the S&P 500 has risen more than 7% over six consecutive days. This is a rare occurrence, having only happened eight times since 1950, with seven out of those times resulting in higher returns over the subsequent six months. > “The consistency of returns following this pattern has historically been strong,” Detrick said in a recent post. “This is a sign of strong upward momentum.” This surge comes amidst hopes of a Federal Reserve interest rate cut and a mild economic downturn by year-end. However, not all analysts share this optimism. Benjamin Sterling, a macro strategist at Ashmore Group, expressed concerns about the current market valuations. He pointed out that the cyclically adjusted price-to-earnings ratio (CAPE Ratio) of the S&P 500 is above 34, much higher than the historical average of 17. Additionally, the technology sector's price-to-earnings (P/E) ratio exceeds 30, and the growth sector's price-to-sales (P/S) ratio has reached pre-bubble levels of 2022. > “The market is pricing in perfection,” Sterling warned. “But if earnings growth slows or inflation rebounds, that premium could quickly dissolve.” Sterling believes that much of the surge in valuation is already reflecting expectations of a Federal Reserve rate cut. Meanwhile, global trade tensions add another layer of unpredictability. Veteran trader at the New York Stock Exchange (NYSE), Peter Tuchman, mentioned the market's sensitivity to trade-related headlines. > “There’s a new twist every day,” Tuchman said. “One positive headline can spike the market, and one hawkish comment can bring it down.” A clear example of this was seen in mid-April when talks of alleviating semiconductor export restrictions between the U.S. and China were underway. The Philadelphia Semiconductor Index (SOX) jumped 2.3% in just one day following the news. Amid high valuations and headline-driven volatility, the current uptrend in the S&P 500 is supported by historical patterns and technical momentum. However, macro risks such as Federal Reserve policies and geopolitical dynamics can still determine the market's direction.