S&P 500 Futures Rise; Dollar Weakens; Gold Hits Record — WSJ

By Barbara Kollmeyer

Jonathan Golub says tech strength and the economy will keep the market going

Animal spirits are not behind this stock market rally, says Seaport Research's Jonathan Golub.

Grinding out its 25th record close for this year, the S&P 500 SPX pushed past some pre-Fed meeting jitters on Monday, with more highs seemingly on the way for Tuesday.

Concerns by some investors that a rapid run-up makes stocks ripe for a pullback assumes a market that's "driven by sentiment and animal spirits and not by fundamentals," says Wall Street veteran and recently-appointed chief equity strategist at Seaport Research Partners, Jonathan Golub, who clearly disagrees with that view.

Read: Investors eyeing a Fed rate cut this week: Beware the unintended fallout for U.S. markets and the economy

Golub and Patrick Palfrey, head of portfolio strategy, expect double-digit returns for the S&P 500 over the next year to 15 months - a 6,700 finish for the index this year, reaching 7,300 by end 2026. That's among the more optimistic targets that have started to trickle out.

They see earnings growth driving that expansion, with tech leadership expected to continue, and while valuations appear stretched, "they will go incrementally higher," Golub told MarketWatch in an interview.

"We're not where we were in the late 1990s. There's far more upside on valuations than people think," he said. "As long as the technology story stays in place and the economy remains reasonably healthy, valuations will keep drifting higher."

The fundamentals are an overlooked part of the picture by some investors, he said.

"In May, economists were assuming a 40% chance that we would have a recession in the next year and that number has come down to 30%. So the economic backdrop has gotten better. The 10-year bond yield year-to date is down 50 basis points, credit spreads are tight, volatility is down," he said.

Recession expectations are on the wane.

"So when you look at this, it's entirely driven by very rational fundamentals, and for that reason, to go and say 'It's gone up too much,' doesn't mean anything. It's not based on anything. The market is not a big hunch, the market is a bunch of fundamentals. It's companies with real earnings and real outlooks and the economy gives it real discount rates to discount those, and all of those are saying this market is very robust and rational," Golub said.

So should investors keep employing that buy-the-dip strategy that has appeared to work well this year for some? He said there's really one question they should ask themselves.

"Is the dip going to be something that is part of a larger downturn or is the economy fundamentally OK and this is a short-term disruption?"

Markets tend to do well in periods outside a recession, so if the market is pulling back on concerns over tariffs, for example, "as long as those don't metastasize into a recession, [dip buying is] a brilliant strategy," he said. But in case of a recession being tripped and outright economic contraction ensues, dip buying "becomes a very bad idea very quickly."

For Golub, what has changed for him through the course of this year is earnings that have turned out better than expected, thanks to tech, and tariff impacts that have proved far less disruptive to the economy and markets than expected. That's even if the labor market is showing some signs of strain.

He said the S&P 500 would struggle to advance without tech continuing to do well. For example if there was a sudden hit on AI spending or technology, that could lead to outright disappointing in earnings for those companies.

"I'm not saying it would, but if it did, it's just very hard to see the profit of the whole S&P 500 hold up, because it becomes a larger part of the picture," he said. The tech sector doesn't have to "surprise by big amounts, it just can't disappoint."

The other risk to their S&P 500 outlook is a further weakening of the labor market or government policy uncertainty that curbs business spending. "We need the economy to do one thing - not go into recession. It doesn't have to grow fast, it just can't go into reverse. And right now, there's very little sign that we're moving toward recession," he said.

The markets

S&P 500 and Nasdaq futures (ES00) (NQ00) are pointing to fresh record highs, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD30Y steady and the dollar DXY softer.

   Key asset performance                                                Last       5d     1m      YTD      1y 
   S&P 500                                                              6615.28    1.85%  2.58%   12.47%   17.44% 
   Nasdaq Composite                                                     22,348.75  2.52%  3.32%   15.73%   27.04% 
   10-year Treasury                                                     4.045      -4.20  -26.40  -53.10   38.60 
   Gold                                                                 3718.3     1.11%  10.07%  40.88%   42.46% 
   Oil                                                                  63.41      1.52%  1.33%   -11.77%  -10.06% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Retail sales for August are coming at 8:30 a.m., and economists are expecting a 0.3% rise after a 0.5% July gain. Import prices are due at the same time, followed by industrial production at 9:15 a.m., then business inventories and a home builder confidence index at 10 a.m.

President Donald Trump's administration has ordered Delta (DAL) and Mexico's Grupo Aeromexico to end their joint venture, saying it's "anticompetitive."

Trump's Fed nominee Stephen Miran was confirmed by the Senate and will vote at this week's central-bank rate-setting policy meeting. An appeals court late Monday blocked an attempt by Trump to fire Fed Gov. Lisa Cook.

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The chart

The September BofA global fund manager survey round-up offers this chart that shows how a record 58% of investors surveyed believe the global equity market is overvalued, incrementally higher than August. Yet "bulls galore," as cash investments remain low and equity allocation is at a 7-month high, as global growth optimism surges, the survey also shows.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   OPEN    Opendoor Technologies 
   AAPL    Apple 
   PLTR    Palantir Technologies 
   NIO     NIO 
   TSM     Taiwan Semiconductor Manufacturing 
   ORCL    Oracle 
   AMZN    Amazon 
   MSFT    Microsoft 

Random reads

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-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

The benchmark indices rebounded sharply on Tuesday, driven by gains in auto and realty shares amid hopes of progress in India-US trade talks and expectations of a US Federal Reserve rate cut.

Sensex climbed 594.95 points or 0.73 percent to settle at 82,380.69, while the broader Nifty advanced 169.90 points or 0.68 percent to finish the trade at 25,239.10, marking its highest intraday level in two months.

Investor sentiment improved as discussions continued between India and the US on tariff-related issues. Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is in New Delhi for talks. "If we get a trade agreement that removes the punitive tariffs, it could be a real shot in the arm for Indian markets," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Global cues also remained supportive ahead of the US Fed’s two-day policy meeting concluding on September 17. Markets are factoring in a 25-basis-point rate cut.

On the sectoral front, realty stocks extended gains for the third consecutive session. The Nifty Realty index rose 1 percent, led by Prestige Estates Projects, The Phoenix Mills, DLF, Anant Raj and Godrej Properties, which gained up to 2 percent.

Buying was also seen in auto, metal and financial stocks, which advanced up to 1 percent.

In contrast, FMCG shares were under pressure, with the Nifty FMCG index slipping 0.3 percent.

In the broader market, the Nifty Smallcap 100 surged 1.91 percent while the Nifty Midcap 100 added 0.6 percent.

GMR Airports and Persistent Systems were among the notable midcap gainers, rising up to 4 percent. In the smallcap segment, Redington and Godfrey Phillips India jumped up to 20 percent.Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The Hang Seng ended little changed on Tuesday, steady around 26,438 after dipping earlier in the session.

Another record close on Wall Street Monday supported sentiment, as bets grew that the Fed will resume its easing cycle this week and leave the door open to further cuts.

Strength in tech and consumer stocks helped offset weakness in property and financials, while traders assessed a framework deal between the US and China to place TikTok under US-controlled ownership, with final approval expected in a Friday call between President Trump and Xi Jinping.

The index tracked mainland shares that finished subdued, with stimulus hopes from Beijing partly countering renewed trade tensions after Nvidia was accused of anti-monopoly violations.

On the corporate front, Tencent Holdings reportedly plans to issue offshore yuan bonds.

Meituan (4.4%), Trip.com (4.2%), Shenzhou Intl. (3.6%), and Geely Auto (3.1%) rose, while JD Health (-5.8%), Sands China (-4.1%), and China Hongqiao (-3.0%) fell.

Paris’s CAC 40 edged down 0.2% to 7,880 on Tuesday, pausing after a six-session winning streak that pushed the index to its highest level since August 22.

Investor focus shifted to the US Federal Reserve’s two-day policy meeting beginning today, with markets broadly expecting a 25-basis-point rate cut—the first in nine months.

Among individual movers, BNP Paribas slipped 0.2% despite reaffirming a bullish outlook, projecting net income above €12.2 billion by 2025 and targeting a 12% ROTE by 2026, supported by strong momentum and solid Q2 results.

Kering gained 1.7%, Capgemini rose 0.8%, and Thales advanced 0.7%.

On the downside, L’Oréal fell 2.3% after Jefferies downgraded the French cosmetics giant’s rating from “Hold” to “Underperform.” Bureau Veritas lost 1.9%, and Teleperformance eased 0.3%.

The Shanghai Composite edged up 0.04% to 3,862 while the Shenzhen Component climbed 0.45% to 13,064 on Tuesday, rebounding from the previous session’s losses amid signs of progress in US-China trade talks in Spain.

US President Donald Trump and Chinese President Xi Jinping are set to speak Friday to finalize terms, with discussions also covering the divestment of Chinese-owned TikTok.

US Treasury Secretary Scott Bessent said the commercial terms had already been settled.

Chinese equities also tracked global peers higher as investors awaited an expected Federal Reserve rate cut this week.

Further support came from rising foreign inflows into mainland markets, fueled by optimism over China’s artificial intelligence and broader tech ambitions.

Technology stocks led the advance, with Victory Giant up 5.3%, Dawning Information 8.8% and Hygon Information 6.3%.

SENSEX increased to 82233.00 Index Points, the highest since July 2025.

Over the past 4 weeks, SENSEX gained 1.17%, and in the last 12 months, it decreased 1.03%.