S&P 500 Holds at Record After $15 Trillion Rally

Nimrit Kang, CIO at North Star Asset Management, talks about the market rally and polarization in the US economy.

Wall Street is ending the big Federal Reserve week on a fairly quiet note, with stocks holding at all-time highs as prospects for rate cuts bolster the outlook for corporate earnings.

While calls for a temporary breather emerged after an almost $15 trillion rally from April lows, bullish sentiment has prevailed. Officials have resumed easing policy at a time when the economy is still growing, sending a more constructive signal for risk taking.

“A combination of Fed easing, robust earnings growth, and AI tailwinds should support further gains for global equities in the coming year,” said Mark Haefele at UBS Global Wealth Management.

Gains were small Friday, with the S&P 500 hovering near 6,650 and set for its third straight week of gains. While the a $5 trillion triple-witching options expiry looms over the market, several analysts have said it won’t necessarily exacerbate price swings given the backdrop of low volatility.

Treasuries continued to see consolidation, slightly cheaper across the curve. Traders are waiting for comments from newly appointed Fed Governor Stephen Miran. The dollar edged up.

A call between US President Donald Trump and Chinese President Xi Jinping is underway, in a discussion that promises to determine the fate of TikTok — and potentially ease trade tensions between the world’s two biggest economies.

US stocks are trading at record levels with earnings season right around the corner, and improving expectations for Corporate America’s profit growth indicate that the rally can keep going.

Among the companies in the S&P 500 Index that provided guidance for their third-quarter results, more than 22% were expecting to beat analysts’ expectations — the highest reading in a year, according to data compiled by Bloomberg Intelligence. In addition, the share of firms issuing worse-than-expected profit forecasts was the lowest in four quarters as well.

Fed Governor Stephen Miran told CNBC his decision to dissent from fellow policymakers’ rate move this week was driven by his view that tariffs have had no material impact on inflation.

Trade discussions came back to focus, with President Donald Trump saying he would meet Chinese President Xi Jinping on the sidelines of the upcoming Asia-Pacific Economic Cooperation summit and hailed progress toward finalizing a deal over TikTok, after a highly anticipated call on Friday.

Fed Bank of Minneapolis President Neel Kashkari said he supported the US central bank’s decision to lower interest rates this week and penciled in two additional cuts this year.

US officials lowered interest rates by a quarter percentage point — the first cut since December — at their policy meeting Wednesday, citing the need to support a more fragile job market.

“The Fed’s rate cut has set a bullish tempo for equity markets,” said Craig Johnson at Piper Sandler, who expects brief consolidation. “These recent new high milestones will likely serve as a ‘pit-stop’ for this bull market before resuming higher.”

Mark Hackett at Nationwide notes that while September has historically delivered pullbacks, this year’s market has defied that pattern.

“Still, with the S&P 500 trading at 22 times forward earnings and volatility suppressed, a period of consolidation or choppiness would be a normal and healthy development.”

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