S&P 500 rally cools off, as Nasdaq 100 shows growth potential

The ‘s six-day winning streak appears to be ending, with early Tuesday trading hinting at a minor 0.2% decline in contracts tracking the index. This follows the index’s best performance in a year, which saw a rally after falling 10% from its July peak. The gains were largely attributed to retreating bond yields and expectations of peaking interest rates. Despite the recent performance, Citigroup strategists maintain a moderately bearish sentiment overall, seeing limited room for further gains as investors close bearish bets through short covering, leading to cleaner market positioning.

In contrast, the shows potential for growth, with $3 billion in new “risk flows” added last week. This has changed its positioning from significantly to marginally bearish.

Strategists from Morgan Stanley and JPMorgan Chase & Co. (NYSE:) foresee an end to the S&P 500 rally due to elevated interest rates and an economic slowdown. This aligns with Citigroup’s cautious stance, suggesting that despite recent gains, the outlook for the S&P 500 remains uncertain given broader macroeconomic factors.

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