'Bond King' Bill Gross predicts stocks will drop as US and China slowdowns overshadow AI hype
Stocks are set to retreat once two bruising headwinds pummel bullish investors into submission, Bill Gross says.on Monday."AI and market momentum vs China/US slowdown and negative curve persisting. I pick the latter."
Gross is known as the"Bond King" as he cofounded fixed-income juggernaut PIMCO and managed its flagship bond fund. Based on his tweet, he believes economic downturns in the US and China, and the, will overpower the current hype around artificial intelligence and faith in the ongoing market rally, sending stocks downward.
Investors are betting aggressively that AI will supercharge productivity and supersize corporate profits. They've piled into the stocks likely to benefit from a boom, including Nvidia, Microsoft, Alphabet, Tesla, and Meta Platforms. The tech-stock rally has widened in recent weeks to include more staid companies such as Walmart, up 10% this year, and Lowe's, up 18%. The market's climb also reflects improved economic sentiment; inflation has cooled from a 40-year high of 9.1% to 3% over the last 12 months, paving the way for the Federal Reserve to start cutting interest rates and avoid a recession.over the last three months, down from 2.2% in the first quarter.
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