AI Throws Wrench in Bear Market Indicators

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Last Updated:

Jun. 1, 2023 at 6:04 PM EDT

4 days ago

By

Eric Wallerstein

, Reporter

Stock-market bulls are hoping the rally among artificial intelligence-linked stocks will bring an end to the bear market while averting a recession.

A recession typically starts permalink">before stocks hit their lowest level of a bear market. Historically, the market bottoms roughly four months before unemployment hits its highest level in a recession, according to Bank of America analysts. The jobless rate remains at multidecade lows, and the inline">latest job openings data was resoundingly strong.

Stocks still look expensive, too. The benchmark S&P 500 trades at 18.3 times its expected earnings over the next 12 months. That remains above its 10-year average of 17.5, lifted by shares of big tech companies. Valuations have collapsed in prior recessions.

The S&P 500's nearly 9% rise this year is being fueled by the stocks in the FANG+ index. Without just a few big-tech names, the stock market would be in the red.

S&P 500

SPX (S&P US)

NYSE FANG+

XX:NYFANG (ICE Gib Ind)