The US stock market is set to rally further from recent all-time highs, according to Goldman Sachs’ John Flood. In a recent briefing, Flood, head of Americas equities sales trading at Goldman’s global banking and markets division, outlined four key reasons why he believes the S&P 500 has more room to grow.
First, Flood predicts a late April market surge, as investors traditionally take gains ahead of tax season, leading to a temporary sell-off before a fresh uptick later in the month. This pattern is driven by retail investors offloading stocks to cover taxes, causing a dip on Tax Day followed by a rebound.
Secondly, Flood highlighted the importance of publicly-traded companies buying back their own stocks. With a projected $925 billion in repurchases this year, the stock supply squeeze is expected to drive up market demand and fuel a forthcoming rally.
Third, Flood pointed to the massive inflow of $1.6 trillion into money market funds since 2023, indicating that there is still plenty of “dry powder” for investors to deploy into the stock market.
Lastly, Flood noted that current sentiment is not yet at peak bullishness, as hedge funds have been net sellers of stocks and have increased their shorting activity in recent weeks. This lack of extreme bullish sentiment suggests that the market still has room to grow.
Overall, Flood’s analysis suggests that the current stock rally has more gas in the tank, with opportunities ahead for investors to capitalize on market tailwinds and seasonality.
