Analysts at Edmond de Rothschild Asset Management have issued a cautious outlook on the U.S. stock market, noting that current valuations appear stretched after months of steady gains. According to reporting from ChainCatcher, the analysts emphasized that the latest surge in equities is heavily dependent on the upcoming interest rate decision by the Federal Reserve.

According to ChainCatcher, analysts at Edmond de Rothschild Asset Management say the U.S. stock market looks highly valued, with the recent rally depending heavily on this week’s Federal Reserve rate decision.

Market Rally Hinges on This Week’s Fed Meeting

The Federal Reserve will announce its next policy move this week, and the decision has become a pivotal factor driving market sentiment. While a rate cut is possible, internal divisions within the Federal Open Market Committee (FOMC) could temper expectations of a sustained easing cycle.

Analysts noted that divergent views among policymakers may undermine hopes for three rate cuts by 2026, a scenario that financial markets had previously priced in.

Money Markets See 86% Chance of a Rate Cut

The U.S. money market is currently projecting an 86% probability of a 25 basis point cut at this week’s meeting. Such a move would mark a shift toward renewed monetary easing after a prolonged period of high interest rates aimed at controlling inflation.

However, Edmond de Rothschild analysts caution that even if the Fed delivers a cut, uncertainty about the pace and depth of future cuts could create volatility—especially given the elevated valuations across major U.S. equity indices.

Valuation Concerns Back in Focus

The analysts stressed that U.S. equities are trading at high multiples, fueled by:

  • Strong inflows into large-cap technology stocks

  • Expectations of monetary easing

  • Improved economic resilience

But if the Fed signals a more conservative path, the current market pricing may prove overly optimistic.

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