The U.S. economic growth is overly optimistic and the U.S. stock market rally may be reversed

The U.S. economic growth is overly optimistic and the U.S. stock market rally may be reversed. The market is increasingly worried that U.S. stock prices are rising because of over-optimism about economic growth. Recently, commodity prices...

U.S. economic growth is overly optimistic, and the U.S. stock market rally may reverse. The market is increasingly worried that U.S. stock prices are rising because of overoptimism about economic growth. Commodity prices have fallen sharply recently, suggesting that the rally in U.S. stocks may reverse in the coming months. (Associated Press) slideshow The market is increasingly worried that U.S. stock prices are rising because of excessive optimism about economic growth. Many strategists believe that the correction in oil and metal prices is a signal to sell high-risk assets, and recommend that investors avoid initial public listings (IPOs) of Chinese Internet stocks and hold on to less volatile stocks, such as utility stocks. Commodity prices have plummeted in recent days, and stock market investors have turned to defensive stocks such as medical care, suggesting that the rise in U.S. stocks may reverse in the coming months. In addition, Emerging Fund Research Global (EPFR), which tracks fund players, said global equity funds experienced net outflows last week, the first time since mid-March. Strategists at Goldman Sachs and Credit Suisse expect that stocks with lower correlation with the economic cycle will perform better in the future. Credit Suisse's chief U.S. stock strategist, Kriegert, said: "The stock-picking strategy of being optimistic and bold about economic growth is a thing of the past." So far, the market has two views on the recent plunge in gold, silver, oil and other commodity prices: One is that the Federal Reserve's (Fed) 600 billion yuan purchase of government bonds plan caused investors' funds to flow into commodities and stocks, creating an asset bubble that is now beginning to burst; the other is that the economy is about to weaken. Copper prices, considered an economic indicator, have fallen to a five-month low. The market's reduced interest in speculative investing can also be seen in the rise in defensive stocks, which have less to do with the performance of the economy. Healthcare and utilities stocks in the S&P 500 led the gains last month, rising 2.9% and 2.6% respectively. Small-cap and mid-cap stocks, which typically lead gains when stocks are strong, have recently narrowed their gains compared to large-cap stocks. Many momentum indicators show that the S&P 500's gains are beginning to weaken. There are also some signs that the IPO market is also showing weakness. The share price of Chinese dating website Jiayuan.com fell on the day it went public on Nasdaq. Renren is known as the Facebook of China, and its stock price has also fallen below the underwriting price. Goldman Sachs said that the rise in stock prices has exceeded economic fundamentals, and its confidence in the recent performance of the stock market has been greatly reduced. It is selling U.S. bank stocks and buying industrial stocks related to basic livelihood necessities. Credit Suisse recommends selling financial stocks and buying health care stocks, while going long on basic necessities and shorting discretionary consumer industries. (World News Network)