S&P 500 rushing to new highs ahead of the FOMC

Expert market comment made by Chief Market Analyst Alex Kuptsikevich of the FxPro Analyst Team: S&P 500 rushing to new highs ahead of the FOMC

S&P 500 rushing to new highs ahead of the FOMC

The S&P 500 hit its 25th record high since the beginning of the year on expectations of a resumption of the Fed's monetary policy easing cycle. Markets are anticipating a 150 basis point cut in the federal funds rate over the next 12 months. According to Bloomberg research, since 1989, the first rate cut in a series outside of recessions has led to an average 8% rally in the broad stock index over the following three months.

Expectations of lower rates are pushing US Treasury yields to their lowest levels since 2022, reducing companies' borrowing costs and increasing corporate profits. At the same time, capital is flowing from money market funds into securities ETFs. Since the beginning of the year, $800 billion has flowed into these funds, including $475 billion into equity funds.

After the removal of trade uncertainty, foreign investors' interest in the US market has returned. According to Deutsche Bank, 80% of all flows into equities are hedged by selling the US dollar. This weakens the greenback and increases the profits of companies operating in foreign markets.

At the same time, according to Morgan Stanley and JP Morgan, the very fact of a reduction in the federal funds rate could slow down the S&P 500 rally and lead to pullbacks. Previously, investors did not pay attention to the cooling of the US economy. After the resumption of the monetary expansion cycle, they will do so. Nevertheless, Morgan Stanley expects to see the index at 7,200 by mid-2026.

Along with expectations of Fed rate cuts, the S&P 500 is being supported by positive news from large companies, such as Alphabet's court victory, Oracle's multi-billion dollar deals, and Elon Musk's $1 billion purchase of Tesla shares.

The stock market is becoming increasingly dependent on giants. While 10 and 60 years ago, the five largest issuers accounted for less than 12% of the market, they now account for almost 28%. Moreover, the most successful companies use a single growth driver: artificial intelligence technologies. This makes investing in American stocks riskier than in previous years. However, as long as AI remains a hot topic, the S&P 500 will continue to grow. As former Citigroup CEO Chuck Prince said on the eve of the financial crisis, ‘as long as the music is playing, you've got to get up and dance.

By the FxPro Analyst Team

FxPro
类型: NDD
规则: FCA (UK), SCB (The Bahamas)
read more
US100, USDCHF, EURUSD

US100, USDCHF, EURUSD

US Core PCE data could shake US100 after its record-breaking rally; SNB steady: No rate change expected as USDCHF eyes recovery; Eurozone PMIs: EURUSD dips as growth shows signs of life
XM Group | 3小时54分钟前
USD/JPY Soars as Yen Weakens on BoJ Policy Concerns

USD/JPY Soars as Yen Weakens on BoJ Policy Concerns

The USD/JPY pair climbed to 148.31 on Monday, extending its gains from the previous week as the US dollar strengthened across the board. The yen faced additional pressure from heightened anticipation around upcoming comments from Federal Reserve officials and the release of critical US inflation data.
RoboForex | 4小时5分钟前
Precious Metals Shine, FX Eyes Policy Outlook | 22nd September 2025

Precious Metals Shine, FX Eyes Policy Outlook | 22nd September 2025

Silver surged past $43.00 to 14-year highs, while gold steadied above $3,650 on Fed easing bets. Oil climbed above $63.20 amid geopolitical risks, AUD regained footing after RBA’s cautious tone, and EUR/USD slipped toward 1.1700 ahead of Eurozone confidence data. Central bank guidance remains the key driver this week.
Moneta Markets | 7小时7分钟前