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Another record high S&P 500: Wednesday's market takeaways

The S&P 500 (^GSPC) hit its first record high since March. Meanwhile, Wall Street grows more bullish, with BMO Capital Markets raising its year-end target for the S&P 500 to 5600, the current highest target on Wall Street. Can the market continue to make such notable gains?

Yahoo Finance Reporter Josh Schafer joins Market Domination Overtime to break down Wednesday's top market takeaways.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Nicholas Jacobino

Video transcript

Record eyes that, that's it.

Right.

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Yeah, I think we're done, but no, we got record eyes for all three major indexes, right?

And Julie was just hitting on this a moment ago.

But I think largely the rallies seem to be driven by the economic data that we got this morning.

You had inflation core CP I finally coming back down, we have been waiting for that to sort of re accelerate, right?

We're sorry, restart coming back down after the first three months of the year and then you had retail sales coming in flat and largely the fear had been well, is the economy may be growing too much, is the consumer too strong?

And that's what's keeping inflation sticking.

It seemed like we got maybe a little bit of fodder on the side of that narrative that OK, maybe we're, we're just all right.

The market moved to pricing in two fed rate cuts this year for the first time in a month.

You had the 10 year down, I think about 10 basis points at one point today again to its lowest level in about a month.

So when you think about the headwinds, we talked about during the April drawdown and you rising tenure, right?

The market's pricing out cuts this year.

Are we even going to this year?

Well, in the last month, we've sort of reversed that conversation when you add that up, it kind of makes sense that the markets rally.

It makes sense.

It doesn't feel at, like I said, woohoo at the beginning of this, it doesn't have that feeling though, for some reason, it doesn't feel like this is this huge, like momentous push upward, like some of the previous rallies that we have seen perhaps, well, because maybe it's only on one inflation print, right?

And I think a lot of economists that we've been speaking with today have said they like the fed, they still want to see a little bit more data, right?

And I think also you could look at the retail sales print and economists sort of spun that with, ok, maybe we had this big tick up in March.

There was also an Amazon sale that apparently impacted non store tailors pretty significantly in March.

So then when you don't have an Amazon sale in April, that's why that declines.

So maybe the decline isn't that bad, but there is a world where retail sales flat month over month isn't the best sign, right?

Of course, that's a normal maybe that's why you feel a little bit of pause though, right?

Is we need to see a little bit more before we get too over excited that like, ok, yay, soft landing fully back on.

Well, listen, Wall Street, you know, Brian Belski is getting more bullish.

5600, which, I mean, 5600 as someone pointed out to me is only 15% gain on the year.

Sure.

Why does he feel?

What was his reasons?

Is it just like he's in a decent economy, decent earnings are good enough camp or he sees something else?

Yeah.

So this is, I should highlight exactly who we're talking about here, right.

We're talking about Vimo Capital Markets Chief Investment strategist, Brian Belski came out today, updated his S and P 500 year end target to 5600 from 5100.

Now, this is the first time Belskis moved his target yet this year, we've been talking a lot about the strategists moving.

This has been his first move and Belski normally sort of labeled as bullish on the streets of coming out with the highest target here.

But what he highlighted Josh, that was interesting to me.

He talked about being comfortable with the fact that market momentum is kind of here to stay and trying not to avoid that this time around.

He was referencing 2021 and 2023 in the rallies that we saw and basically not being willing to just admit that the market momentum is moving in a way that could get us to 5600 and then he actually used a lot of historical analysis in here.

He does feel good about earnings.

I know you asked about that.

Dusky usually feels good about earnings, but he also used a little bit of his historical analysis in here.

And Julia, you were just talking about this, that we'd only get to a 15% game for the year.

But what he was referencing is the, how much we've rallied to this point when you rally for the first five months at about an 8% clip.

Normally from May to December stocks do particularly well, they gain, he got to 5600 using a 7% gain from where we were yesterday and over 70% of the time if we have the first five months, like we just had that is what happens.

So essentially saying that strength will sort of beget strength to some extent, the one caveat I should add, he still thinks we could get a larger pull down than we've seen thus far this year.

That would be a time to pile in.

He's saying, yeah, maybe, maybe so.

Right.

But him, him sort of warning that that drawdown that we had in April isn't normally the biggest drawdown you'd see in a year.

Did he break out Josh, when he, with his note, did he break out?

Ev pops the hood where, what sectors he likes.

Not particularly in this note, it wasn't full sector by sector, sort of going through exactly how he's getting there.

But it will be interesting to see sort of how maybe the rotation place.

Sorry, I'm interrupting you because I want to get in this last point.

Mag seven is still going up, mag seven is still going up.

Mag seven is at an all time high as well.

So I was looking at the MAGS index which is the round tail ETF that tracks, that tracks the magnificent seven.

And I just thought it was interesting as we're talking about all time highs across all three indexes.

We haven't really talked about the mag seven a lot over the last month.

We've been talking about the individual stocks and the fact they're doing better, right?

And also interesting within that is kind of the rotation we were writing earlier in the year about how it was Amazon that was doing better and Meadow was doing better and NVIDIA is doing better.

Will you look over the last month?

It's Apple, it's alphabet and of course, it's still NVIDIA but setting the stage a little bit, maybe heading into NVIDIA earnings next week.

May 22nd you've been watching, you know, it's May 22nd.

We've been talking about a lot.

Thanks Josh.