On September 15, we advised investors to proceed with caution. We pushed out our 8,400 S&P 500 target from year-end 2026 to mid-2027 and set 7,900 as our new year-end target. On October 14, we reiterated our caution. Sure enough, the stock market has been turbulent since mid-September, with AI-related stocks falling sharply.
We are seeing some buying opportunities, but better ones are likely after the November 3 midterm elections. Our main concern is a likely escalation of the Middle East war. That could push oil prices above their $120 peak earlier this year.
I. Stock Market Performance
The S&P 500 is still up double digits ytd at 11.4% (chart). XMAGS is up 13.1%, while MAGS is up only 6.2%. The gap has widened again in recent weeks as MAGS rolled over. Meta led the latest leg down, falling 9.4% last week after reporting earnings.
Breadth remained on the weak side. Only 37.8% of S&P 500 companies are outperforming the index on a y/y basis (chart).
