The S&P 500 index ticked up 0.3% yesterday, and has risen eight times in the last nine trading sessions. It is now less than half a percentage point away from its record high, and futures were pointing marginally up again this morning. Nasdaq 100 futures were even more optimistic, up 0.39% before the open in New York. The VIX “fear” index (which measures volatility) has sunk 12.6% this month, indicating that investors seem to have settled in for a calm, quiet, risk-on holiday season.
They have reason to be happy. Washington is preparing a wave of incoming liquidity that is likely to generate fresh demand for equities.
For instance, the CME FedWatch index shows an 87% chance that the U.S. Federal Reserve will deliver an interest rate cut next week, delivering a new round of cheaper money. Further cuts are expected in 2026.
Furthermore, Wall Street largely expects President Trump to announce that Kevin Hassett will replace Fed Chair Jerome Powell in May—and Hassett is widely regarded as a dove who will lean in favor of further rate cuts.
Elsewhere, the Fed has begun a series of “reserve management purchases,” a program in which the central bank will buy short-term T-bills—a move that will add more liquidity to markets generally.
Banks, brokers, and trading platforms are also lining up to handle “Trump Accounts”, into which the U.S. Government will deposit $1,000 for every child. The trust fund can be invested in low-cost stock index trackers—a new source of investment demand coming online in the back half of 2026.
So it’s no surprise that nine major investment banks polled by the Financial Times expect stocks to rise in 2026—by an average of 10%, according to their estimates.
The Congressional Budget Office also estimates that the One Big Beautiful Bill Act will add 0.9% to U.S. GDP next year largely because it allows companies to immediately deduct capital expenditures from their taxes—spurring a huge round of corporate spending.
With all that fresh money on the horizon, it’s clear why markets have shrugged off their worries about AI and Bitcoin. The only shock will be if the S&P fails to hit a new all-time high by the end of the year.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
- S&P 500 futures were up 0.2% this morning. The last session closed up 0.3%.
- The STOXX Europe 600 was up 0.3% in early trading.
- The U.K.’s FTSE 100 was up 0.14% in early trading.
- Japan’s Nikkei 225 was up 2.33%.
- China’s CSI 300 was up 0.34%.
- The South Korea KOSPI was down 0.19%.
- India’s Nifty 50 is up 0.18%.
- Bitcoin was flat at $93K.
