Investors may have also grown more cautious after an extended Trump-induced rally, with many concerned about valuations in the current market. The S&P 500 is now trading at around 18 times forward earnings estimates, compared to the long-term average of about 15 times, according to Thomson Reuters data.
“I think to a degree, equities are priced to perfection and there are several indicators that point to caution,” Sandven added.
Moreover, many are still waiting on President Donald Trump’s administration for policy changes, notably deregulation, tax cuts and higher spending targets.
“U.S. markets, we believe, are in really good shape, but the danger is they’ve priced in a lot of good news,” Michael Thompson, managing director at S&P Global Market Intelligence, told the Wall Street Journal. “The market won’t be happy if we don’t see some movement on middle-class tax cuts. People expect to see tangible plans and debate this year so something gets done in 2018.”
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