Market Overview - The S&P 500 and Nasdaq reached new record highs, with the S&P 500 closing at 6,445.76 points, marking its 16th record close of the year [4][11] - The recent rally was fueled by lower-than-expected inflation data, which raised hopes for a potential rate cut in September [5][7] Economic Indicators - The Consumer Price Index (CPI) rose 0.2% in July, lower than the expected 0.3% increase, and year-over-year CPI rose 2.7%, also below the consensus estimate of 2.8% [5] - Core CPI, excluding food and energy, increased by 0.3% in July, aligning with expectations, while year-over-year core CPI rose 3.1%, slightly above the anticipated 3% [6] Investor Sentiment - There is a growing optimism among investors regarding rate cuts, with a 94% chance of a 25-basis point cut in September, up from 85% prior to the CPI report [7][11] - The S&P 500 has rebounded significantly after nearing bear market territory in April, gaining 2.8% in the past month and 9.6% year-to-date [9] Investment Opportunities - Recommended S&P 500 stocks with strong growth potential for 2025 include: - **Adobe Inc. (ADBE)**: Expected earnings growth rate of 12% for the current year, Zacks Rank 2 [12] - **Microsoft Corporation (MSFT)**: Expected earnings growth rate of 12.3%, Zacks Rank 2 [14] - **Broadcom Inc. (AVGO)**: Expected earnings growth rate of 36.1%, Zacks Rank 2 [16] - **Analog Devices, Inc. (ADI)**: Expected earnings growth rate of 16%, Zacks Rank 2 [18] - **Arista Networks, Inc. (ANET)**: Expected earnings growth rate of 23.8%, Zacks Rank 1 [20]

Inflation & Tariffs - The report suggests that tariffs' impact on goods inflation was not significant in the current CPI print [2] - Services inflation showed broad-based gains, raising concerns about overall inflation [3] - The expectation is that the impact of tariffs on inflation will increase in the second half of the year [4] - Corporations may initially absorb tariff costs, but will eventually pass them on to consumers, particularly in sectors with low margins like groceries [10][11] - Uncertainty remains regarding the ultimate tariff rate and its full impact on the economy [11] Monetary Policy & Fed - The market anticipates an aggressive path of rate cuts, which is reflected in equity market performance [5] - The analyst suggests the Fed should consider only one or two rate cuts this year due to inflation concerns [3] - Political factors and dovish Fed governors could influence the Fed's decisions [5] - The analyst believes reason will prevail within the Fed committee, leading to rate cuts, but potentially only 25 basis points [6][7] - A 25 basis point rate cut may not significantly benefit the mortgage market or other interest rate-sensitive sectors if the 10-year yield rises [7] Bond Market & Yields - The 2-year Treasury yield is expected to range between 350 and 400 basis points (35%-4%) due to aggressive policy easing already priced in [14] - The 10-year Treasury yield is expected to remain range-bound between 400 and 450 basis points (4%-45%) [14] - The 30-year Treasury yield is more volatile and dependent on global bond yields [14][15]

Inflation and Economic Growth - The data suggests that inflation is not a major concern, with the bigger problem being a lack of real growth [2] - Real GDP growth in the first half of the year is slightly less than 1% annualized, and job creation is up 60 basis points annualized [3] - Current inflation is running at 2.5% to 3% [3] Federal Reserve (Fed) Policy - A Fed rate cut is anticipated, with the expectation that the Fed will choose to ease next month [3] - The market has been narrow in this bull market because the Fed has been tightening [7] - If the Fed cuts the funds rate, long-term bond yields and mortgage rates could decrease, the dollar could weaken, and the money supply could increase, all of which are positive for stocks and the economy [9] - A Fed rate cut could be a game-changer, potentially initiating a new bull market [10] Market Outlook and Investment Strategies - Small caps and midcaps offer a very attractive relative PE discount, trading at more than 30% discounts to their average 20-year relative PE with the S&P 500 [12][13] - Historically, 12 months after the Fed starts cutting interest rates, large caps gain less than 4%, while small caps are up about 3%, indicating significant room for small caps to move [13] - If the Fed eases, leadership may broaden out to small caps, international value plays [11]

I think uh uh the the committee put their uh rate cut program on pause when the tariff situation arose uh six months ago and now you have six months of evidence. Uh I don't really think tariffs cause inflation. Taxes don't cause inflation.And so what you're seeing in the data is very muted effects uh that are one-time increases in the price level. And so you're not really seeing anything. And the committee's coming around to the view, I think, that this is probably a one-time increase in the price level and ...

JUST IN: 🇺🇸 September rate cut odds surge above 94%.Rate cuts incoming 🚀 https://t.co/ka24IJuVro ...

it's market fully pricing in that you will get a rate cut in September. If you analyze the report, you'll see that you had the uptick in services, but the concern for last month was about the good side of the report and that has moderated. Look, overall for me, it's simple.When we're thinking about inflation and tariffs, there's enough revenue growth, Steph, in the earnings that the companies are able to absorb it. Obviously, it's a little bit of a hit to profit margins, but that's okay because the revenue ...

Market Overview & Economic Factors - Late August is expected to have low liquidity, and September is traditionally the worst month for the S&P 500 [2] - Earnings are expected to grow over 10% year-over-year, about double the consensus [2] - Weak payrolls data (around 73,000) and ISM data raise concerns about the economy [3] - Uncertainty surrounding the next Fed chair is making markets nervous [3] NASDAQ & Tech Sector - The NASDAQ is considered a favorable investment area due to the AI trend, moderating 10-year Treasury yields, and its appeal during economic slowdowns [5] - The AI boom is still active, with companies continuing to invest tens or even hundreds of billions in AI [6] Interest Rates & Fed Policy - A weak August payrolls report could lead to a 25 basis point rate cut, and a 50 basis point cut should be considered [7] - A 4% to 4.5% range is expected for the 10-year Treasury yield for the rest of the year, assuming the economy shows signs of slowing [8] - The Fed is closely watching employment markets, balancing this with the impact of tariffs on inflation [10] - The base case is a 25 basis point rate cut in September, unless August payrolls are significantly weaker [11] - A one-time bump in inflation is expected due to tariffs, but core inflation is trending towards the Fed's target [12] Investment Opportunities - Infrastructure is favored, driven by increased investment in the US on both public and private sides [13][14] - AI data centers and upgrading electrical grids are key areas within infrastructure [14] - Utilities are a strong play for infrastructure, needed to fund electricity for AI and upgrade grids for renewable energy [16]

For more on these inflation headlines and what they might mean for markets, let's bring in PNC asset management chief investment strategist Young Ma who joins us here at Post 9. Great to see you. Welcome.Um you do think the market gets supported if if and when we get a rate cut maybe this year. Yes, I think so. I think that's important point of the market support right now is the expectation the Fed's going to cut rates at this point multiple times is what the market's expecting. That's one of the most impo ...

Market Trends - US stocks experienced an increase following Trump's announcement of chip tariff exemptions [1] - Data releases have strengthened expectations for a Federal Reserve rate cut in the coming month [1]

A slew of feds be scheduled for today as investors await President Trump's pick for the Fed. Governor Trump saying he will make a decision before the end of the week. Bloomberg's Michael McKee joining us now.Mike, we learned yesterday that one person has got best out of the race. Four candidates that we understand. What's the process going to be like to get this person in that seat. Well, the process is going to take a while because the person who goes to that seat is going to have to be confirmed by the Se ...