What's Next for Stocks After Fed's Rate Cut

Market Overview - The market has continued to climb to record highs despite the Federal Reserve's cautious stance on interest rate cuts, indicating strong bullish momentum [1][2] - The economic backdrop shows a projected 10% EPS growth this year and 12% next year, with GDP growth being stable but not overly strong [2][3] AI Investment Cycle - The current investment cycle in AI and related technologies is still in its early stages, with Oracle projecting significant growth in performance obligations through 2030 [3][4] - The digitization of the economy is driving investments towards the technology sector, allowing for elevated valuations [4][6] Interest Rates and Yields - Long-term yields are a key factor to monitor, as rising rates could impact market valuations; the 30-year yield is particularly important if it surpasses 5.13% [5][13] - Recent data shows initial claims for unemployment benefits at 231,000, indicating a softening labor market but not at concerning levels [6][7] Small Cap Stocks - The Russell 2000 has reached new all-time highs, benefiting from rate cuts and a catch-up play in the market [9][10] - Caution is advised regarding the sustainability of this rally, as rising long-term yields could challenge the small cap trade [12][14]