Cantor Fitzgerald: The US stock market shows overbought signals and may correct in the short term
Cantor Fitzgerald warned that the U.S. stock market may experience a pullback, as the S&P 500 has signaled overbought conditions. While maintaining an optimistic outlook for the medium-term, trade tensions could exert pressure on economic growth and inflation. The firm expects a pullback in the stock market in the short term, partly due to new tariffs taking effect on August 1, which may delay the Federal Reserve's interest rate cuts. Additionally, the relative strength index (RSI) of the S&P 500 has exceeded 70, and historical data shows that this situation often leads to a pullback
According to the Zhitong Finance APP, Cantor Fitzgerald's latest macro report takes a cautious stance on the recent outlook for the U.S. stock market, although the firm remains optimistic about the overall outlook as the S&P 500 has shown signs of being overbought. The investment company believes that the mid-term environment for the stock market is improving, but it simultaneously warns that the escalating trade tensions are complicating the economic situation.
The company stated, "We believe that the mid-term outlook for the stock market has significantly improved in our view, but the trade war is becoming increasingly severe, which could add additional pressure to economic growth and have an upward impact on inflation levels."
Cantor Fitzgerald expects that investors will ultimately view the current trade-related turmoil as a "one-time event," allowing the market to refocus on long-term growth potential. However, the firm anticipates a pullback in the stock market in the short term, partly due to the newly announced tariffs taking effect on August 1, which may delay further interest rate cuts by the Federal Reserve.
Additionally, the investment company pointed out some technical warning signals. As of June 30, the relative strength index (RSI) of the S&P 500 had risen above 70. Historical analysis indicates that similar situations often lead to pullbacks—since 2018, in 22 such instances, there have been 7 cases with at least a 4% decline, and nearly half of the cases saw declines of 3%
