By John Lau, CPA, CFP®
November 1, 2025 – Federal Reserve Chair Jerome Powell gave markets a bit of a surprise last Wednesday. His comments sounded more hawkish (meaning less eager to cut rates) than many investors expected. Up until his press conference, markets were almost certain—about 90%[1] sure—that the Fed would cut interest rates in December. After his remarks, that probability dropped to about 55%—basically a coin flip.
That sudden shift naturally raises a question: if the Fed isn’t as eager to lower rates, does that mean the bullish case for the market has lost strength? In my view, not really. Here’s why.
1. The Fed still leans toward easing — just not on autopilot.
Powell clearly pushed back on the idea that a December cut is guaranteed. But importantly, the official Fed statement—which reflects the consensus view of all voting members—didn’t change its overall tone. It still showed a bias toward easier policy ahead. In other words, rate cuts remain on the table, just not on autopilot.
Whether the next cut happens in December or a few months later doesn’t matter as much as the fact that the Fed is still cutting rates—not raising them. The real risk would be if Powell suggested the Fed was done cutting altogether, and he didn’t do that.
2. The main driver of this market isn’t just the Fed — it’s AI.
Right now, artificial intelligence (AI) is the single most powerful force behind the market’s momentum. Every week brings another wave of billion-dollar investments, partnerships, and spending announcements from the biggest tech names.
You can see it in the numbers: the equal-weight S&P 500 ETF (RSP) has slipped in October because of disappointing earnings in many non-tech sectors, while the traditional S&P 500 (SPY), dominated by large tech names, is up solidly for the month—driven almost entirely by AI-linked companies.
In short, AI enthusiasm has far outweighed any short-term worries about Fed policy.
3. What really matters going forward
The key supports for this market remain:
- AI enthusiasm
- Solid economic growth
- Ongoing Fed rate cuts
- Stable global trade conditions
Of these, AI remains the most dominant driver. Even with mixed earnings from Microsoft, Meta, and Google, all three reaffirmed massive ongoing spending plans in AI—the kind of investment that continues to fuel growth and confidence.
Bottom Line
While markets may pause or pull back after such a strong run, the Fed’s softer stance on a December cut doesn’t change the broader bullish picture. The economy remains resilient, AI investment is booming, and the Fed is still in easing mode—even if it’s proceeding more cautiously.
So, no—the bullish argument isn’t broken. It’s just catching its breath.
Closing Thought
For thoughtful investors, this environment reinforces the value of balance: participating in growth themes like AI and technology while maintaining the protection and liquidity that only disciplined portfolio construction can provide. Our focus remains on aligning strategy with opportunity—and helping clients stay ahead of what comes next.
Our clients rely on us for timely information, and our job is to deliver.
Did the Fed Weaken the Bullish Argument?
By John Lau, CPA, CFP®
November 1, 2025 – Federal Reserve Chair Jerome Powell gave markets a bit of a surprise last Wednesday. His comments sounded more hawkish (meaning less eager to cut rates) than many investors expected. Up until his press conference, markets were almost certain—about 90%[1] sure—that the Fed would cut interest rates in December. After his remarks, that probability dropped to about 55%—basically a coin flip.
That sudden shift naturally raises a question: if the Fed isn’t as eager to lower rates, does that mean the bullish case for the market has lost strength? In my view, not really. Here’s why.
1. The Fed still leans toward easing — just not on autopilot.
Powell clearly pushed back on the idea that a December cut is guaranteed. But importantly, the official Fed statement—which reflects the consensus view of all voting members—didn’t change its overall tone. It still showed a bias toward easier policy ahead. In other words, rate cuts remain on the table, just not on autopilot.
Whether the next cut happens in December or a few months later doesn’t matter as much as the fact that the Fed is still cutting rates—not raising them. The real risk would be if Powell suggested the Fed was done cutting altogether, and he didn’t do that.
2. The main driver of this market isn’t just the Fed — it’s AI.
Right now, artificial intelligence (AI) is the single most powerful force behind the market’s momentum. Every week brings another wave of billion-dollar investments, partnerships, and spending announcements from the biggest tech names.
You can see it in the numbers: the equal-weight S&P 500 ETF (RSP) has slipped in October because of disappointing earnings in many non-tech sectors, while the traditional S&P 500 (SPY), dominated by large tech names, is up solidly for the month—driven almost entirely by AI-linked companies.
In short, AI enthusiasm has far outweighed any short-term worries about Fed policy.
3. What really matters going forward
The key supports for this market remain:
Of these, AI remains the most dominant driver. Even with mixed earnings from Microsoft, Meta, and Google, all three reaffirmed massive ongoing spending plans in AI—the kind of investment that continues to fuel growth and confidence.
Bottom Line
While markets may pause or pull back after such a strong run, the Fed’s softer stance on a December cut doesn’t change the broader bullish picture. The economy remains resilient, AI investment is booming, and the Fed is still in easing mode—even if it’s proceeding more cautiously.
So, no—the bullish argument isn’t broken. It’s just catching its breath.
Closing Thought
For thoughtful investors, this environment reinforces the value of balance: participating in growth themes like AI and technology while maintaining the protection and liquidity that only disciplined portfolio construction can provide. Our focus remains on aligning strategy with opportunity—and helping clients stay ahead of what comes next.
Our clients rely on us for timely information, and our job is to deliver.
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[1] CME FedWatch
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