Capital Economics believes the AI-driven equity boom is nearing its end and sees defensive sectors, including real estate and consumer staples, as the best places to shelter if the trade falters. The firm nevertheless expects one more stock-market rally led by technology stocks before the reckoning. It forecasts that the S&P 500 could fall to 6,500 by the end of 2027 if the AI trade deflates or bursts, a decline of 16%. Falling Treasury yields could cushion the impact on real estate, while consumer staples may offer even stronger protection during an AI selloff.
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