Fed's rate cut sends stocks to record highs. Where are markets headed from here?

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The S&P 500 and the Dow vaulted to record highs one day after the rate cut.

Spencer Platt/Getty ImagesExperts who spoke to ABC News voiced cautious optimism about the outlook for the stock market, since rate cuts typically“We’re in for some volatility,” Steve Sosnick, chief strategist at Interactive Brokers, told ABC News. “It wouldn’t surprise me if the move higher is more of a grind than it is an escalator.”

The banner trading session on Thursday took hold despite market fluctuations in the immediate hours following the rate cut on Wednesday afternoon, as Wall Street digested the central bank’s announcement. In early trading on Friday, markets appeared to resume that uneasy posture with a small move downward for each of the major indexes.

“We finally got the rate cut that the market was expecting for months,” Callie Cox, chief market strategist at Ritholtz Wealth Management, told ABC News.mainly on large tech companies propelled by enthusiasm over artificial intelligence. Lower interest rates could broaden the market's upswing to companies in other sectors of the economy, giving stocks room to rise even after months of strong performance, Cox said.

Sosnick put it more bluntly. “It’s really hard to have good markets without a good economy. There are reasons to be concerned that something worse than a soft landing is on the horizon,” he said.Something else looms on the horizon: the presidential election in November. Experts predicted that the election would drive some financial headlines and stoke uncertainty, but they downplayed its ultimate impact on market performance.

 

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