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Forget AI and inflation, FOMO is now the stock market's dominant force

Aug 01, 2023 - markets.businessinsider.com
The stock market in 2023 has been dominated by "FOMO" (Fear of Missing Out), driving stocks higher and surprising many on Wall Street. The S&P 500 index rose 3% and the Nasdaq Composite climbed 4% in July, with positive economic data showing growth surging, inflation falling, and the jobs market remaining firm despite 16 months of aggressive interest-rate hikes.

Many pessimistic market analysts, including Morgan Stanley's top strategist Mike Wilson, have had to revise their gloomy forecasts in light of the unexpected rally. Wilson admitted to being wrong and now believes that stocks are in a "pivot rally" with room to run. Similarly, Citi US equity strategist Scott Chronert raised his S&P 500 forecast from 4,000 to 4,600 points. The market's longest winning streak in two years has shown that FOMO now rules the market.

Key takeaways:

  • The fear of missing out (FOMO) is now the dominant force driving the stock market, overshadowing AI, inflation, and the Fed.
  • The S&P 500 index rose 3% in July 2023, with the Nasdaq Composite climbing 4%, driven by positive economic data and a strong jobs market.
  • Previously pessimistic market strategists, including Morgan Stanley's Mike Wilson and Citi's Scott Chronert, have abandoned their gloomy forecasts, acknowledging the potential longevity of the 2023 rally.
  • Despite previous predictions of a recession, AI has pushed mega-cap Big Tech stocks to new all-time highs, contributing to the stock market's longest winning streak in two years.
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