U.S. Federal Reserve (Fed) chair Jerome Powell is heading to Capitol Hill today for a semi-annual congressional testimony. Only one week ago, Mr Powell noted he and his colleagues need additional data to be sure that inflation pressure has already laid down on the track to the central bank's notorious 2% target. So, similar comments are expected from the Fed's Chair. Meanwhile, the FedWatch Tool on Chicago Mercantile Exchange (CME) shows that more than 70% of private traders are betting on the launch of interest rate cutting already on September 18, with less than 15% feeling the Fed may keep rates unchanged even after its next meeting in early November. The cautious rhetoric of Fed officials does not bother the Wall Street optimists as most of them are inclined to attribute uncertain words to central bankers' intention of just doing no harm to price dynamics ahead of proper time. Yet, most investors hope that the Fed will do what's necessary in a crucial election year to avoid even a slightest hint, which could potentially derail the current market rally, as neither political side would like to see the S&P 500 surprisingly tumbling. In addition, Trump's chances of coming back to the White House look high. During his previous term, the ex-president persistently vowed for low or better extremely low, interest rates for the sake of economic growth. If so, Fed members would obviously like to take their first step on this path with their own hands, and not upon a potential request from the White House.

There is little doubt among Wall Street legends, as a herd of bulls is marching ahead. Strategists at Oppenheimer, a New York City based brokerage and investment bank, which was founded in 1950, raised its year-end target price for the S&P 500 broad market barometer to 5,900, up from 5,500. Analysts mentioned economic "resilience, driven by the Fed’s cautious monetary policy", and also increased their average earnings projection in 2024 for the S&P 500 to $255, up from $250, citing an "innovation cycle that could benefit all 11 sectors of the S&P 500", as it shows signs of "being both cyclical and secular coupled with cross generational demographic needs that suggest a shift in mindset regarding equities".

To put it simply, every Dick, Tom and Harry could say the cash is burning their hands while assets are not. Constant desire to save each bundle of Dollars or Euros from the fire of inflation is one driver, while the generative AI (artificial intelligence) based hope for investigating consumer data to raise corporate profits from smart offering goods and services is another one. This is probably not the last revision for the S&P 500 target by various investment houses.

As to the camp of sceptics, it looks relatively rare and divided. Morgan Stanley's Mike Wilson said in an interview with Bloomberg that "the chance of a 10% correction is highly likely sometime between now and the election", only adding that the "third quarter is "going to be choppy", while he estimated the probability of "stock prices closing the year higher than they are now" at 20% to 25%, with "your likelihood of upside from now until year-end is very low, much lower than normal", because the rally drove the S&P 500 to a 17% increase this year following its 24% surge in 2023. Yet, Morgan Stanley's analyst, who was calling for a bigger market correction since last Christmas, now has nothing against an opportunity of new price highs in nearest months before predicted correction. He also added that he "isn't particularly concerned about a pullback", but instead, it could create more opportunities for investors to buy in since current valuations are "unexciting".