Capital Economics: The U.S. stock market may struggle to return to early October highs in the near term

In a report, KaiCatcher macroeconomist Joe Maher stated that even if market concerns about the political outlook in the United States prove to be excessive and the stock market rebounds in the short term, the U.S. stock market may still struggle to return to the early October highs.

He pointed out that the catalyst for the overnight market sell-off seems to be investors' worries that Democrats may seek to regulate the artificial intelligence industry and limit data center construction, both at the congressional level and at the state level.

Maher noted that the market sentiment towards artificial intelligence trades had already shown signs of weakness, and the U.S. stock market has exhibited many typical characteristics of a late-cycle phase. Therefore, this event could potentially serve as a triggering factor, leading to a longer-lasting retreat in the artificial intelligence stock boom.