Analysts and market participants are alarmed about the state of the US stock market, predicting its collapse. So, it makes sense to factor in this grim scenario. However, is the situation really that dire? Experts have detected some bad omens on Wall Street, for instance, the stunning rally of Nvidia's shares. Remarkably, the global chip manufacturer's market capitalization recently topped $3 trillion, driven by the AI-related hype.
Having scrutinized the current stock market dynamics, Wall Street analysts Pam Martens and Russ Martens found parallels with the so-called dot-com bubble in the US in the late 1990s. The analysts caution that the ongoing bull market is doomed to be interrupted by a deep downward correction. The dot-com bubble ended up in the same way.
Nvidia's extraordinary performance is a precursor of a looming slump. According to the financial experts, the chip manufacturer "risks becoming detached from economic realities, laying the groundwork for a large-scale correction."
Earlier, economist Harry Dent also predicted a decline in the US stock market. Moreover, he reckons that the upcoming crash will be more severe than the 2008 crisis: "It’s unprecedented for the authorities to support an artificial bubble for a decade and a half. Such initiatives commonly end badly. The S&P index is expected to tumble by 86% from its peak, and the Nasdaq by 92%. The bullish stocks like Nvidia, no matter how good they are, could collapse by 98%."
The pessimistic sentiment is further amplified by the high volatility in the stock market, where upbeat results, especially in the tech sector, are driven by robust speculation rather than the companies' fundamental indicators.