The S&P 500’s Remarkable Rise and the Burning Question…

Investors have become mighty bullish, if you couldn’t tell from the S&P 500’s massive run this year. The market index is now trading above its levels before the Fed started raising rates 16 months ago.

2023 showed how fast markets can change. Market sentiment has rapidly improved, and data continues to show growing optimism among consumers and investors.

• For the first time since April 2021, more than 50% on the AAII Investor Sentiment Survey were “bullish.”
• In our own monthly “bullish or bearish” survey, investors have mostly been optimistic since the end of last year.
• July consumer sentiment reached its highest level since September 2021, per the University of Michigan’s survey.

The question on everyone’s minds…

Can the market rally maintain its momentum? Vanguard’s Investor Behavior Group’s senior researcher believes that “Investors are saying loud and clear that they expect the current stock market rally to continue” (MW).

• Vanguard’s recent survey showed investors expecting the S&P 500 to return 5.5% in the next 12 months.
• Goldman Partner John Flood thinks the S&P 500 will break new highs by the end of the year (BBG) — indicating a 6% rise in the S&P 500 from yesterday’s close.

Cashing in on tech: Hedge fund Peconic Partners is up nearly 60% in the past three years (4x that of the S&P 500) by betting against the market as it began falling — and reversed those bets as it started going up.

• Now, they’ve begun diversifying away from tech — having dumped all their Alphabet (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) shares.
• At the start of the year, AI-driven tech stocks led the market up — but the rally has spread to other sectors.

Instead, Peconic has positioned itself in industrial companies that can benefit from the growing US infrastructure spending — including MasTec (NYSE:MTZ), Quanta Services (NYSE:PWR) and WESCO International (NYSE:WCC).