Can stocks rally while rate-cut dreams fade? The S&P 500 eked out its third record close in a row last week, while the Dow and Nasdaq flirted with all-time highs. Yet after the hot PPI print, the rate-cut narrative isn’t as breezy as it was just days ago. Futures markets now price in an 85% chance of a September rate cut, but with fewer bets on a jumbo move. Other signs of jitters:
- Small caps led last week's gains, a typical "rate cut" trade now on shaky ground
- Bitcoin retreated 3% after setting a record—reminding us that even crypto isn’t immune to shifting Fed expectations
- Retailers like Walmart and Target report this week, their profit guidance may show who’s absorbing or passing on tariff pain
Even so, more than 80% of S&P 500 companies have beaten earnings expectations this quarter, which has given markets reason to stay upbeat…at least for now. Big question: Is this a healthy "pause" or the start of a bigger recalibration if inflation keeps surprising?
