S&P 500 and Nasdaq both notch record closes

Market Overview - The S&P 500 has increased by 35% over the past six months since the tariff crash low, indicating strong market performance [1] - The current bull market is reaching its three-year anniversary, historically suggesting continued upward movement with an average duration of eight years [2] Federal Reserve Insights - The Federal Reserve has a history of cutting interest rates after a six-month pause, with half of those instances leading to stock market gains of approximately 8% over the next six months and 15% over the next twelve months [3][4] - There is optimism that the Federal Reserve may cut interest rates two more times this year, particularly if the government shutdown continues [6] Investment Opportunities - Significant investment in AI infrastructure is anticipated, with projections suggesting an increase from $600 billion to $3-4 trillion by the end of the decade, presenting growth opportunities in AI and aerospace/defense sectors [6][7] - The current market valuations of the S&P 500 are above historical averages, indicating potential caution, but there are still underlying growth opportunities, particularly in healthcare and small-cap biotech sectors [9][10][11] Diversification Strategies - Diversification into undervalued areas of the market is recommended, with healthcare and small-cap biotech being highlighted as potential sectors for growth due to expected M&A activity [10][11] - Municipal bonds are currently underperforming but may present a good diversification opportunity as supply decreases and demand increases, alongside international stocks which are outperforming U.S. stocks [13][14]