Market rally doesn't need a Fed rate cut in December, says Bank of America's Chris Hyzy

Market Outlook - The market is currently experiencing weakness due to reduced expectations for a Federal Reserve rate cut in December, but it does not necessarily need this cut to maintain momentum [2][3] - There is an optimistic outlook for profit cycles extending through 2026, supported by easier financial conditions and increased liquidity [3] Key Investment Areas - Significant capital expenditure (capex) is being observed, particularly in artificial intelligence and broader digital infrastructure, indicating potential for growth beyond just AI [4] - Consumer spending remains healthy, with notable contributions from the baby boomer demographic in sectors like travel, leisure, and entertainment, which is helping to mask weaknesses at the lower end of the market [4][5] Profit Momentum - Profit momentum is critical, especially for small-cap companies, and is expected to improve as the market moves into 2026 [8][9] - The current market environment presents opportunities to capitalize on weaknesses, as there is no fundamental news driving the downturn [6][9] International Investments - The company maintains a neutral stance on international investments, having closed out underweight positions earlier in the year, and is riding the momentum in both developed and emerging markets [12] - Growth is slowing in Europe and the UK, while Japan is showing signs of recovery, indicating a mixed international investment landscape [12][13]