National Securities‘ chief market strategist Art Hogan has projected that the ongoing market turbulence will continue until the end of June despite the current trading week beginning on a positive note.
“The month of May and certainly the month of June likely will be very similar in their patterns: choppiness on an intraday basis, but flat at the end of the month,” said Hogan.
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The strategist tied the current volatility to inflation worries but acknowledged that the stock market had managed the swings well, considering the Dow Jones index is up 2% in May while the S&P 500 has remained flat. However, the Nasdaq index that entails most tech companies, has plunged 2%.
Inflation’s role in current market swings
Hogan stated that most market swings occur in correlation with inflation reports. Notably, the April inflation surged to a 12 year high amid the rising energy prices. The Consumer Price Index increased 4.2% from a year earlier.
He added that cryptocurrencies, technology, and SPACs are playing a key role in the market swings amid stretched valuations alongside speculations.
“Entering this week and exiting the month, I think we’re in a better place in terms of valuations. Froth has come off the top, but I think we enter next month in a better place and firmer standing, at least on a valuation basis.”
For investors, Hogan advises focusing on a long-term portfolio without engaging in aggressive trades regardless of the risks. Elsewhere, Hogan projects that the S&P 500 index will potentially surpass his initial l year-end target of 4,300.