‘Politically motivated' Fed more likely to cut rates, BNY chief economist predicts

Earnings Expectations - The S&P 500 is projected to have a year-over-year growth of 10.5% for the third quarter, with the tech sector expected to grow by 23.5% [2][3] - Major companies such as Apple and Amazon are set to report earnings, which will significantly influence market sentiment as they collectively represent over 24% of the S&P 500's market cap [3] Federal Reserve Insights - The Federal Reserve is anticipated to cut rates, with a likely reduction of 25 basis points, although there is speculation about a potential 50 basis point cut [4][5] - The Fed is closely monitoring earnings reports for insights on pricing power, demand, and spending intentions from CEOs and CFOs [6] AI Sector Developments - Nvidia has announced multiple partnerships in the artificial intelligence space, reinforcing its position as a leader in AI chip technology [7] - The focus is on whether these AI initiatives will generate substantial returns, as the market is currently saturated with announcements but lacks clarity on profitability [8][9] Market Dynamics - The ongoing government shutdown is being monitored for its impact on consumer behavior and retail performance, with major retailers like Walmart and Dollar General expected to provide insights in upcoming reports [12][14] - The overall market is experiencing a rally, with optimism about AI's integration into various sectors potentially driving further growth [10][11] Future Outlook - The political landscape is expected to influence future Federal Reserve policies, particularly with upcoming changes in leadership and board composition [15]