S&P 500 Hits New High After Fed Rate Cut: Bullish Forecast for US Stocks
Financial stocks also saw notable gains, with JPMorgan Chase rising 1.5%. Industrial stocks similarly advanced, driven by expectations that lower borrowing costs will boost economic activity.
Shifting Investor Focus to Corporate Earnings
With the Fed’s decision behind them, investors are now focusing on corporate earnings growth, which has remained robust throughout the year. Analysts suggest that the Fed’s move may bolster the chances of an economic “soft landing,” where inflation cools without significant harm to growth.
Michael Purves, CEO of Tallbacken Capital Advisors, noted that much of the rally could be attributed to the removal of uncertainty following the Fed’s rate cut. Ed Yardeni, founder of Yardeni Research, highlighted the potential benefits for smaller, highly leveraged companies and value stocks that tend to benefit from lower interest rates.
Expectations of Continued Volatility
Despite the positive momentum, some strategists warn of potential volatility in the near term. Karl Schamotta, chief market strategist at Corpay, suggested that foreign exchange markets could face turbulence as traders recalibrate rate expectations in other global economies.
Traders are preparing for Friday’s quarterly expiration of stock options, index options, and futures, totaling approximately $5.1 trillion in notional terms. This event could further increase volatility as traders adjust their positions.