Wall Street Faces Potential Pullback After Strong First Half of 2024
- Microsoft and Eli Lilly have been identified as two of Wall Street's most overbought stocks as of the mid-year mark.
- This designation is based on market performance analysis and investor sentiment.
- Investors should consider the implications of this assessment on future stock performance.
As Wall Street approaches the end of a robust first half of 2024, analysts are cautioning that some stocks may be due for a pullback. The S&P 500 has seen a notable increase of approximately 15%, while the Dow Jones Industrial Average has risen by 5%. The Nasdaq Composite has led the charge with a remarkable 20% gain, reflecting a strong performance across major indices. Microsoft has emerged as a standout performer, with its shares climbing nearly 21% this year, bolstered by advancements in artificial intelligence and the successful rollout of its Copilot feature. However, the stock's 14-day Relative Strength Index (RSI) reading of 74 suggests it may be overbought, indicating a potential for future corrections. The tech giant has experienced a monthly increase of over 9%, contributing to its impressive year-to-date performance. Eli Lilly has also benefited significantly from the rising popularity of GLP-1 drugs, which have attracted considerable investor interest outside the AI sector. Meanwhile, FedEx is showing signs of being overbought, with an RSI of 77, raising concerns about its sustainability. In contrast, Walgreens has struggled, with its fiscal third-quarter earnings falling short of expectations, leading to a 52% decline in its shares this year. Analysts remain cautious, with 62% recommending a hold on the stock, reflecting a lack of confidence in its recovery.