Another institution is bullish! Federated Hermes: Strong corporate earnings and economic outlook support US stocks, providing a good buying opportunity during the pullback
Federated Hermes's Deputy Chief Investment Officer Steve Chiavarone stated that due to strong corporate earnings and economic prospects, the pullback in the U.S. stock market may be brief and limited. He suggested increasing positions when the market weakens and believes that market pullbacks are healthy and help to eliminate bubbles. Several Wall Street analysts hold an optimistic view on the U.S. stock market outlook, believing that under the backdrop of the Federal Reserve's interest rate cuts and robust corporate earnings, the U.S. stock market is expected to continue rising
According to the Zhitong Finance APP, Steve Chiavarone, the Deputy Chief Investment Officer of the asset management company Federated Hermes, stated that due to strong corporate earnings and economic prospects, the pullback in the U.S. stock market may be brief and limited.
Since entering September, the U.S. stock market has had a sluggish start, as investors reassess the high valuations of technology stocks, while concerns over government spending have triggered a sell-off in the bond market, impacting market sentiment. This week, the focus of the market is on key labor market data released ahead of the Federal Reserve's policy meeting.
Steve Chiavarone said, "If you want to do something, it’s to increase positions when the market weakens." "If you strip away the noise and volatility, in an environment of earnings growth, upward revisions of earnings expectations, good economic data, and impending interest rate declines, I wouldn’t bet on a decline in the U.S. stock market."
The S&P 500 index has stalled after reaching a new high in August.
Steve Chiavarone added that a pullback in the stock market is healthy, as it will eliminate the "bubble" that has built up over the past four months. He stated, "You can't just go straight up to the moon from the low in April." He expects potential buying opportunities in sectors related to economic growth and interest rate-sensitive stocks.
Recently, several Wall Street figures have expressed optimism about the outlook for U.S. stocks. Michael Wilson, Chief U.S. Equity Strategist at Morgan Stanley, stated that with the Federal Reserve likely to cut interest rates and strong corporate earnings, the U.S. stock market is expected to continue rising after four consecutive months of gains.
This strategist, who correctly predicted the rebound of U.S. stocks during the sell-off in April, noted that the U.S. economy is entering the "early stage of the cycle," where nominal earnings continue to grow and borrowing costs decline. He added that small-cap stocks and other interest rate-sensitive stocks have lagged this year, indicating room for catch-up. Michael Wilson wrote in a report, "We refute the notion that 'rate cuts are fully priced in.' We respect the upcoming seasonal weakness window, but if the market pulls back, we will still buy on dips."
Julian Emanuel, Chief Equity and Quantitative Strategist at Evercore ISI, stated that driven by the artificial intelligence (AI) boom, the U.S. stock market could rise another 20% by the end of 2026. Julian Emanuel noted in a report that the S&P 500 index is expected to reach 7,750 points by the end of next year, stating, "The technological revolution will elevate stocks, valuation multiples, and society to new heights." According to data compiled by Bloomberg, Julian Emanuel's 2026 target for the S&P 500 index is the highest on Wall Street to date
