Wall Street fund managers are piling back into equities, even as the economic backdrop turns shakier. Bank of America's latest Global Fund Manager Survey, released Tuesday, showed global equity allocations for September rose to a seven-month high while average cash balances held steady at just 3.9% for the third straight month — a level that often signals caution as investors run short on dry powder. Still, BofA strategist Michael Hartnett noted sentiment hasn't tipped into full-blown euphoria. That woul ...

Market Overview - The S&P 500 closed at a record high of 6,615, with expectations that the Federal Reserve will begin cutting interest rates soon, prompting analysts to raise year-end forecasts [1] - Some analysts predict the index could surpass 7,000 before December, indicating a potential 6% rise over the next 76 days, which is considered a bullish outlook despite the current record levels [2] Labor Market Impact - Recent labor market reports, including a disappointing August report with only 22,000 new jobs and a revision that removed nearly one million jobs from previous estimates, have shifted investor sentiment towards expecting multiple interest rate cuts [2] - The current labor market conditions, characterized by slower wage growth, are seen as beneficial for corporate profits, with Goldman Sachs noting that a cooling labor market can enhance profit margins [3] Technology Sector Influence - Technology stocks, particularly Nvidia and Tesla, are leading the market rally, driven by optimism surrounding AI and its potential to boost future earnings for tech companies [4] - The anticipated Fed rate cuts are making tech companies' future earnings appear more attractive, with expectations of lower labor costs contributing to this positive outlook [4] Market Sentiment - Wall Street is currently experiencing a period of exuberance, with rising stock prices and analysts increasing their targets, as investors react positively to weak job reports, viewing them as indicators of impending cheaper capital [6] - The sustainability of this bullish sentiment remains uncertain, particularly if unemployment continues to rise [6]