Fed cutting cycle means market breadth narrative has legs, says SoFi's Liz Thomas

Market Outlook & Fed Policy - The market anticipates a Fed cutting cycle, suggesting a broadening out trade with legs through the end of the year if more cuts occur [2] - Investors should monitor the Fed's summary of economic projections for year-end expectations [2] - The market may react negatively if the Fed signals weakness, especially if hoping for a 50 basis points cut next week [8] - A 25 basis points cut is expected, with increments of 25 unless data deteriorates significantly, with focus on the labor market [5] - The Fed's unemployment rate target is 45%, allowing room for the labor market to cool further [6][7] - The market prefers the Fed to cut due to data alignment with its dual mandate, not out of concern for weakness [9] Investment Strategy - Diversify growth and momentum exposure, considering small caps via equal-weighted S&P exposure [1][3] - Sectors like healthcare, financials, and energy are attractive at current levels [3] - Software companies are the next conduit for AI, presenting buying opportunities on dips due to high valuations [11][12] - AI investment opportunities extend beyond semiconductors, with a long runway in other sectors [12]