The S&P 500 sank for a second straight day yesterday but no one’s complaining—it is still up nearly 13% year-to-date. Futures are also marginally down this morning, premarket, suggesting that investors aren’t expecting too much drama in stocks today.
The U.S. Federal Reserve has signalled that further interest rate cuts are likely on the way—and new cheap money will be good for stocks in the future.
But the chatter among investors is that the market is likely to plough higher before a correction shows up—precisely because those Fed cuts appear to be baked in.
“For stocks, history suggests that the path ahead is likely higher, based on previous instances when the Fed cut rates when stocks were trading near or at record highs,” Adam Turnquist, chief technical strategist for LPL Financial in Charlotte, N.C., told clients in a note seen by Fortune this morning. “From a technical perspective, it is hard to argue with a bull market that is making new highs and powered by cyclical leadership. However, building overbought conditions paired with diverging market breadth suggest this melt-up could be due for some cooling off.”
Yet the party is likely to continue, despite the fact that the U.S. stock markets are dependent on the fate of just seven—or maybe even just one—company.
Here’s snapshot of the markets ahead of the opening bell in New York this morning:
