The S&P 500
is trading at roughly the same level from five months ago, which could mean U.S. stocks are poised to keep on rallying after their stellar performance in October, according to Jim Paulsen, chief investment strategist at the Leuthold Group. With less than two months left in the year, Paulsen said it’s notable that stocks are trading at roughly the same levels from early June, considering the steady drumbeat of “bad news” that investors have endured during the intervening months.
Some examples cited by Paulsen include the most aggressive Federal Reserve interest-rate hikes in decades, along with an increasingly inverted Treasury yield curve and disappointing third-quarter earnings from Amazon.com Inc.
Meta Platforms Inc.
and other megacap technology names that once led the market higher. While many economists are worried about the U.S. economy sliding into a recession next year, the outlook outside North America is even more dire, Paulsen pointed out. An energy crisis has roiled the European economy as the war in Ukraine has dragged on. In China, President Xi Jinping’s “COVID zero” policy has sapped growth. Yet U.S. stocks have taken all this in stride, bouncing back after briefly tumbling to their lowest levels since late 2020 last month. As of Monday, the S&P 500 was trading more than 5% off intraday lows reached on Oct. 13. That stocks are essentially flat during the period cited by Paulsen doesn’t mean the market hasn’t been volatile. Conversely, realized volatility has been conspicuously elevated since the start of 2022.
Since Jan. 1, the S&P 500 has risen or fallen by 2% or more during 42 trading sessions, according to Dow Jo …