(Boursier.com) — The rise in artificial intelligence stocks and optimism about economic growth at a time of easing monetary policy are the ingredients of a “magic sauce” to generate more of gains in the stock markets, according to Michael Hartnett, flagship strategist at Bank of America. The specialist says that a “baby bubble” in AI is “growing”. A pickup in U.S. business activity, just as the Federal Reserve may begin cutting interest rates, also bodes well for the S&P 500 to continue hitting new highs, according to Michael Hartnett quoted by ‘Bloomberg’.
Already rising sharply on expectations of a Fed rate cut, the stock markets received a new shock this week with the breathtaking publication of Nvidia, the current star of Wall Street. The ‘Magnificent Seven’ – Microsoft, Apple, Nvidia, Amazon.com, Meta Platforms, Alphabet and Tesla – are responsible for more than 60% of the S&P 500’s gains over the past 12 months, Hartnett points out.
BofA’s “Bull & Bear” indicator remained at 6.6 over the past week, placing it in “bullish territory,” but the bank believes it was not overly stretched. On a scale of 10, a value greater than 6 corresponds to an upward trend and a value less than 5 to a bearish trend. “The positioning is not yet extremely bullish, but it should not be long,” says BofA.
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