Fund managers who went to cash when the pandemic broke out have been forced back in to stocks, pushing measures of positioning toward historical highs. Wall Street forecasters, some of whom threw up their hands in surrender four months ago, are pushing up targets each day. Even Goldman Sachs Group Inc., which once warned that bad loans and falling dividends could drive a second leg of the bear market, now sees another 6% of upside in the S&P 500.
While a testament to the career pressure missing a $12 trillion rally creates, the unanimity has become one of the higher risk factors in markets suddenly, with positions getting crowded as most are forced to shop for. A custom gauge of sentiment compiled by Citigroup Inc. showed “euphoria” just reach the highest level since the dot-com era.
Fear of missing out gave birth to the rally and now it’s downright rampant after stocks staged a power rebound from the fastest market ever. More than 50% in less for six months, the S&P 500 is calm for the fastest recovery on record. The index increased to as high as 3,395.06 on Tuesday, the incredible prior intraday record reached in February, before trading little changed on the day.
After reducing their subjection to a historically at decreased level during the downdraft money manager take up the equity, related to a survey by the National Association of Active Investment Managers. The group’s exposure index, following investment advisers from 200 companies overseeing quite $30 billion, has raised up to a two-year high. Even if the foremost bearish respondents are 50% high equities, something not seen since late 2017.
“Takeaways from discussions with institutional investors point out significant comfort with central banks’ willingness to give rates at a low level for a maximum period,” Tobias Levkovich, chief U.S. equity strategist at Citigroup, wrote about this last week. “
The latest skeptic giving in is Goldman’s David Kostin, who boosted his 2020 target by 20% to three, 600, the foremost bullish among peers. The call ended in the months of skepticism over the market’s resilience, it includes warning in May that the S&P 500 would probably drop to 2,400 over the subsequent three months. Just like the others, Kostin’s bullish case is centered on near lower interest rates.
