There are still signs that US stocks could rise from recent record highs, according to John Flood, who leads Americas Equities Sales Trading for Goldman Sachs Global Banking & Markets.
Flood acknowledges that the S&P 500’s strong year-to-date rally has mostly come on the back of rising valuations. But contrary to those who see signs of a bubble, he says that positioning has not become overly bullish.
“Hedge funds have been net sellers of stocks,” Flood points out, “and have picked up their shorting activity significantly in recent weeks.”
Meanwhile, publicly listed companies remain an important buyer. Companies are expected to repurchase $925 billion worth of their shares this year, according to Goldman Sachs Research.
Further, the $1.6 trillion that has flowed into money market funds since 2023 suggests to Flood that “there’s still plenty of dry powder out there.”
Turning to the short term, Flood says a seasonal pattern could point to a late April boost. “Retail investors tend to sell stocks in order to pay their tax bills – meaning we often see the market slip into Tax Day, then rally afterwards.”
Flood’s bottom line? “Even here at all-time highs, I’m still very constructive US equities.”