There is potential for volatility if we don't receive a September cut, says Empower's Marta Norton

Federal Reserve Policy & Market Expectations - The market anticipates clarity from the Fed chair's Jackson Hole speech regarding potential rate cuts in September, but the Fed is unlikely to commit to a specific course of action [2][4] - The Fed is expected to emphasize concerns around tariff-induced inflation and the labor market, while assessing its long-term framework established in 2020, particularly average inflation targeting [3][4] - The futures market had previously priced in a 100% probability of a September rate cut, but this expectation has decreased due to comments from Fed officials [5][6] - If a rate cut is not announced in September, there is potential for market volatility [7] Earnings Performance & Economic Impact - Earnings season has been strong, with companies exceeding analysts' expectations of just under 5% earnings growth, achieving growth between 11% and 12% [8] - Strong earnings have mitigated concerns about the impact of tariffs and a weaker economy [9] - Despite significant shifts in trade policy and tariffs, the expected ramifications on economic data and earnings have been muted [10][11] - The impact of tariffs on earnings is expected to become more apparent over time [12] Market Outlook & Investment Strategy - There is reason to moderate expectations for future earnings, particularly for Q3, as tariffs could weigh on performance [13] - A significant amount of positive news has already been priced into the market, suggesting a need for caution [14][15] - The market has experienced broad-based gains, with sectors like tech, industrials, financials, and consumer staples performing well, indicating a degree of euphoria [14]