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Emerging markets said to see the next bull run as the 'sell U.S.' narrative gains ground

1. Moody's downgrade of U.S. assets boosts emerging market optimism. 2. Emerging markets are up 8.55% year-to-date; S&P 500 only 1%. 3. Bank of America predicts emerging markets to outperform in current cycle. 4. Low investor positioning strengthens appeal of emerging market equities. 5. A weaker U.S. dollar could enhance emerging market performance.

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FAQ

Why Bearish?

The downgrade has dented confidence in U.S. assets, typically leading to S&P 500 declines. Similar past events have shown correlation with rapid sell-offs.

How important is it?

Emerging markets' performance shifts investor focus, impacting capital flows and U.S. equities like the S&P 500.

Why Short Term?

Immediate market reactions to downgrades are often swift; historical example: 2011 S&P downgrade spurred immediate declines.

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