[Music] That is the closing battle on Wall Street announced market domination overtime. We're giving you full coverage of all the moves to get you up to speed on the action from today's trade. Yahoo.Finances Jared Blickery join us here to break it all down. Jared, let's get to with you on that close. you Josh.I'm looking at a photo finish for the S&P 500. Assuming this holds, and this is uh correct. Sometimes these things fluctuate.That would be another record high for the benchmark index of the world. Uh b ...

Uh the S&P 500 and NASDAQ hitting new highs uh this morning as the government shutdown is in its second day. Our next guest says the deadlock in Washington doesn't change his overall strategy, but he did make some moves uh for Q4, including lowering communication services to a market weight from overweight for the first time since 2023. Joining us now is Scott Croner, US equity strategist at City.Uh Scott, great to have you on here. So big picture, it feels as if I mean the constructive forces remain in pla ...

Market Outlook - 314 Research maintains its S&P 500 target of 6,800 for 2025, approximately 2% from current levels [1] - The equity market experienced two positive developments from the Fed this week, supporting a continued long position in the bull market [2] - A potential growth scare, with an estimated one-third chance of occurring in the coming months, could lead to a 7-8% pullback in the equity market [9] - In a growth scare scenario, the 10-year Treasury yield could potentially drop below 350 basis points (35%), although this is not the base case [11] Fed Policy & Economic Indicators - The market had priced in more rate cuts than the Fed signaled in June, setting a high bar for the Fed to clear [3] - Instances where the Fed moves slightly towards market expectations after high expectations have historically been positive for equities in the following quarter [4] - The Fed is effectively lowering the real Fed funds rate (nominal Fed funds rate minus inflation projections) across 2025-2027 [6] - The Fed may be more concerned about the labor market than they are letting on, potentially anticipating a larger left tail risk [16][17] Portfolio Strategy - 314 Research is pressing longs into year-end, paired with an overweight bond position [10] - Investors should prepare their portfolios for potential risks, particularly related to growth concerns [17] - During a growth scare, equities tend to experience increased volatility, with potential drawdowns, while bonds rally [9][16]

Group 1 - The Federal Reserve has cut interest rates by 25 basis points, with expectations for at least another 50 basis points of easing this year due to growing labor market risks [4][7][10] - The market reaction to the Fed's decision was mixed, with bond yields rising and the dollar index falling to its lowest since February 2022, while the S&P 500 and Nasdaq fell, and the Dow and Russell 2000 rose [5][7] - The rotation from Big Tech and growth stocks into small caps and cyclicals was observed during the summer but has cooled in September, indicating potential shifts in market sentiment [2][3] Group 2 - The impact of tariffs on the U.S. economy has not yet been fully realized, with stronger-than-expected retail sales in August and a projected Q3 growth rate of 3.4% [8][9] - U.S. firms have shouldered 64% of the tariff burden, with expectations that this will shift to 1% for consumers and 63% for firms, potentially affecting consumer prices [9] - The Fed's easing cycle is occurring while many global central banks are winding down their own easing, creating a divergence in monetary policy that may lead to volatility in global markets [10][12][13] Group 3 - The current Fed easing cycle may provide a tailwind for global equities, especially if it leads to a 'soft landing' without a recession, which is already being priced into the market [17][18] - Analysts suggest that equities are in the early stages of an upswing, with some expecting a potential 'euphoria' phase, particularly in Europe and Japan [19] - The risk remains that the Fed may not meet aggressive easing expectations, which could tighten global financial conditions and lead to a market correction [20]

Economic Outlook - Consumer prices rose in line with expectations in August, indicating no significant surprises for the Federal Reserve [1][2] - The Federal Reserve is likely to cut rates by 25 basis points next week, with a 50 basis point cut being off the table [2][3] - There are tariff effects present in the consumer basket, but they are not substantial enough to alter the Fed's plans [3][5] Labor Market Analysis - Initial jobless claims have increased, and continuing claims are trending higher, indicating a weakening labor market [9][10] - The duration of unemployment is at its highest in four to five years, suggesting challenges in job recovery [10] - Revisions to last year's job growth data indicate that the labor market was not as strong as previously thought [12][13] Inflation and Consumer Impact - Inflation is expected to worsen before improving, with businesses struggling to pass on cost increases to consumers [6][7] - Lower-end consumers are particularly unable to absorb price increases, leading businesses to explore cost-cutting measures [7][8] - Profit margins are likely to come under pressure, which could lead to lower market multiples and affect investor returns [22][24] Market Sentiment - The current economic data suggests a potential for slower growth rather than a hard landing [20] - Market valuations may be high relative to fundamentals, indicating that expectations for rapid growth may not be sustainable [21][22] - There is concern that a weakening jobs market combined with compressing profit margins could negatively impact the stock market [22][24]

Market Outlook - The market's first half performance suggests timing the market is difficult [3] - Markets have moved higher due to reduced Middle East tensions, anticipated Fed rate cuts, and a slowing but non-recessionary economy [3][4] - The market is approaching highs for 2025, supported by the expectation of a couple of rate cuts in the second half of the year [4] Earnings and Valuations - S&P 500 is trading at a premium, but strong earnings growth could drive the market higher [5][6] - First quarter earnings exceeded expectations, with actual earnings growth of approximately 12% compared to the expected 6% [6] Tariffs and GDP - A 10% tariff rate for the rest of the world (excluding China) could reduce GDP by about 1.5%, potentially skirting a recession [7] Global Diversification and US Market - Investors should remain globally diversified, with a neutral to weaker dollar benefiting non-US equities [9] - The US market is bullish, driven by artificial intelligence, with almost two-thirds of earnings growth driven by technology stocks [9] - Mega-cap tech stocks drive over 30% of the S&P 500's market cap, making the US a strong place to generate returns [9] Fixed Income and Bond Market - The bond market has calmed down, with the 10-year yield around 4.25% [10] - Factors like concerns about US Treasury safety and the impact of the "big beautiful bill" on the deficit could negatively affect the bond market [11] - Municipal bonds are attractive due to high yields and strong fundamentals driven by the strength of the US economy [12]