Artificial Intelligence Excitement Powers Stock Market Rally, Not Fed Rate Cuts: Insights from Bespoke’s Paul Hickey

Analyst warns that Fed rate cut may negatively affect stock market outlook

Jerome Powell, Chairman of the U.S. Federal Reserve Board, recently announced that interest rates will remain unchanged, quelling concerns of a possible rate cut that typically signals economic trouble. However, according to Bespoke’s Paul Hickey, the current stock market rally is being primarily driven by artificial intelligence excitement rather than the need for a rate cut from the Fed.

Hickey cautioned that while many investors are eagerly awaiting a rate cut from the Federal Reserve this year, this may not necessarily lead to the market boost that some are hoping for. He noted that a rate cut usually indicates economic challenges rather than positive trends and could even signify a significant economic slowdown.

Despite the anticipation for a Fed rate cut, Hickey pointed out that recent stock market gains have little to do with central bank actions. He highlighted that major U.S. indices reaching all-time highs have more likely been influenced by developments in artificial intelligence such as ChatGPT’s announcement in late 2022 playing a significant role in the rally.

Looking ahead, Hickey suggested that earnings reports may pose a greater risk to the stock rally than the absence of a Fed rate cut. He pointed to market reactions during last week’s earnings reporting as an indication that the stock market’s performance may be more closely tied to company performance rather than central bank policies.

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