Citrini Research, which previously shook markets with an apocalyptic report about AI, is now warning that high oil prices could push stocks lower. Founder James van Geelen says that if the war in the Middle East continues, energy prices could stay high and hurt both consumers and companies. Because of this, he believes that “if the war doesn’t end, equities will go lower,” even if the Federal Reserve eventually cuts interest rates.
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New trading tool for SPY bullsThe reasoning behind this view is fairly straightforward. High oil prices act like an extra cost on the economy, leaving consumers with less money to spend and raising costs for businesses. At the same time, with interest rates already near neutral levels, van Geelen argues that the Fed doesn’t need to raise rates further to slow things down. Instead, just keeping rates where they are could already be restrictive enough, as higher energy prices gradually work their way through the economy and reduce growth.
Even if the conflict cools down, Citrini still sees limited upside for stocks. That’s because consumers may come out of this period slightly weaker after dealing with higher fuel costs, which could hold back spending. In addition, the firm pushes back on the idea that rate cuts will save the market. Van Geelen believes that if the Fed does cut rates, it would likely be because the economy is becoming weaker, and historically, that kind of environment has led to further declines in stocks rather than strong rallies.
Is SPY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SPDR S&P 500 ETF Trust (SPY) stock based on 414 Buys, 79 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPY price target of $834.08 per share implies 27% upside potential.
