Stocks will rally despite extended dollar declines, markets survey finds
The S&P 500 will climb to 6,500 — a better than 9% increase from Thursday's close — by year-end, according to 44% of the 27 responses in a Markets Live Pulse survey.
The index was seen reaching that level by the first half of next year by 26% of participants, with 11% saying it would happen in the second half and the remainder estimating 2027 or later.
A rally to 6,500 would likely mean the market fully moves on from concerns that President Donald Trump's tariffs may severely damage the economy. It would represent a substantial recovery from the impact of the trade war, which currently has the US benchmark hovering just above its starting level for 2025.
Expectations for the dollar are gloomier, with 68% of the 25 respondents to that question forecasting the US currency will keep falling at least until the first half of next year. That includes the 40% of participants who expect the depreciation trend to extend into 2027.
The MLIV panel discussed both whether US exceptionalism in equities was past its use-by date, and the potential that concerns about how sustainable the dollar's haven role has become.
The survey responses may be taken to signal doubts that US equities will be knocked from their perch anytime soon, especially given the still-positive impacts from the AI boom expected to feed through into corporate earnings.
The dollar's downtrend is seen as far more sustainable. That signals respondents may be leaning into the idea that the currency channel will go on being the clearest expression of concerns regarding US assets in general.
If investors are going to be demanding a greater premium to put their money into the US that will come via a lower US dollar level, rather than via sustained, serious declines in nominal asset prices.
As for Treasuries, responses were more evenly split. A modest majority, 56% of the 25 who answered that question, expected the 10-year yield to end 2025 at 4.6% or above. That included the 24% of the total who forecast it would be above 5%. The yield was at 4.39% on Thursday. Some 20% saw it dropping below 4%.
The MLIV Pulse survey was conducted among Bloomberg clients immediately after MLIV's Money & Macro panel held Thursday on How to Trade the New Markets Regime. Sign up for future surveys here.
Reynolds writes for Bloomberg
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'The H20 is a potent accelerator of China's frontier AI capabilities, not an outdated AI chip,' as 20 former government trade officials told Commerce Secretary Howard Lutnick, who oversees trade policy, in a July 28 letter. 'If the U.S. backs off of export controls to China, we believe that China's next generation of frontier AI will be built on the backs of the H20,' the officials wrote. The chip 'will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms, and rapid advances in battlefield decision-making.' How the export deal may affect Nvidia's top or bottom lines is murky, though its immediate effect doesn't seem all that significant. In May, the company announced a $4.5-billion writedown of unsold H20 inventories in the first quarter ended April 27 because of the U.S. ban on H20 sales. But it still recorded $23.3 billion in operating profit for the quarter on sale of $44.1 billion. 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