Core Insights - Wall Street strategists indicate that certain economic indicators, such as the August CPI and employment reports, may influence the Federal Reserve's decision on monetary easing [1] - The strategist maintains a target for the S&P 500 index, projecting it to reach 6,600 points by the end of 2025 and 7,700 points by the end of next year, with a subjective probability of 55% for this baseline scenario [1] - If the Federal Reserve lowers interest rates as expected in September, a "bull market" is more likely to occur, potentially pushing the index to 7,000 points by the end of 2025, with the 2026 bull market expected to be driven by earnings [1]

Group 1 - Goldman Sachs research team has revised its forecast for the Federal Reserve to initiate interest rate cuts in September instead of December, expecting three cuts of 25 basis points each throughout the year [1][3] - The likelihood of a September rate cut is slightly above 50%, driven by a reassessment of tariff policy impacts, with evidence showing that the inflationary impact of tariffs is lower than previously expected [3] - The labor market's subtle changes, including increased job-seeking difficulty, support the case for rate cuts, with potential downward risks from seasonal factors and immigration policy changes [3] Group 2 - Goldman Sachs has significantly raised its S&P 500 index return expectations, projecting returns of 3%, 6%, and 11% over the next 3, 6, and 12 months, respectively, with target levels of 6400, 6600, and 6900 points [4] - The adjustment in return expectations is based on earlier and deeper monetary easing by the Federal Reserve, lower bond yields, and strong fundamentals in large-cap stocks [4] - The continuous improvement in liquidity conditions is expected to support market gains, with an estimated inflow of approximately $80 billion into global equity markets over the next month [4]

Group 1 - U.S. stock market gains narrowed, with the S&P 500 index rising by 0.3% and the Nasdaq increasing by 0.2% [1] - Former President Trump announced that he will terminate all trade negotiations with Canada [1]

Group 1 - Morgan Stanley's Chief U.S. Equity Strategist Mike Wilson suggests that a mild economic recession could pave the way for a stock market rally, particularly if it leads to interest rate cuts by the Federal Reserve and a recalibration of corporate earnings expectations [1][2] - The firm has reduced concerns about an economic recession due to recent easing of U.S.-China trade tensions, projecting the S&P 500 index to rise to 6,500 points in the next 12 months, approximately a 10% increase from current levels [2] - In a bullish scenario, Morgan Stanley anticipates a mild recession followed by a market rally, with the S&P 500 potentially reaching 7,200 points, representing a 22% increase if the economy rebounds quickly from tariff-induced fluctuations [2] Group 2 - Wilson notes that if a recession occurs, the Federal Reserve will likely need to lower interest rates to alleviate high unemployment and stimulate the economy, with expectations of seven rate cuts by 2026 providing significant support for the stock market [3] - The stock market is expected to bottom out in early 2026 and then rebound, with earnings per share (EPS) growth briefly dipping into mild negative territory before recovering, driven by cyclical sectors sensitive to interest rates and government spending [3] - In the event of a mild recession, small-cap stocks and lower-rated stocks are likely to be the biggest beneficiaries, as smaller companies typically gain more in low-interest-rate environments [3]