Wall Street banks are betting that the blockbuster rally in US stocks will cool next year as investors turn cautious on technology companies’ ability to profit from their big investments in artificial intelligence.
Ten major banks, including Morgan Stanley, HSBC and Goldman Sachs, expect the S&P 500 index, the main US equities barometer, to rise roughly 8 per cent on average to around 6,550 between now and the end of next year, taking it to fresh highs.
That would be below the index’s historic average annual returns of around 11 per cent. So far this year the S&P has rocketed around 28 per cent on the back of big gains in technology stocks and Donald Trump’s presidential election victory, surprising many investors who had anticipated it would be held back by a slowing US economy.