Economy·Everyone agrees stocks are suspiciously high.
And everyone agrees they’re going higher anywayBy Jim EdwardsBy Jim EdwardsExecutive Editor, Global NewsJim EdwardsExecutive Editor, Global NewsJim Edwards is the executive editor for global news at Fortune.
He was previously the editor-in-chief of Insider's news division and the founding editor of Insider UK. His investigative journalism has changed the law in two U.S. federal districts and two states.
The U.S. Supreme Court cited his work on the death penalty in the concurrence to Baze v. Rees, the ruling on whether lethal injection is cruel or unusual.
He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.SEE FULL BIO Jordan Siemans via Getty ImagesU.S.
stocks declined for a second straight day and the futures market was marginally down before the opening bell in New York this morning.
Yet even if the S&P 500 notches a third straight day of declines today, traders think it will eventually swing higher.
This is despite a feeling among analysts that equity valuations are historically high and the market is being driven by a handful of companies.
The S&P 500 sank for a second straight day yesterday but no one’s complaining—it is still up nearly 13% year-to-date.
Futures are also marginally down this morning, premarket, suggesting that investors aren’t expecting too much drama in stocks today. The U.S.
Federal Reserve has signalled that further interest rate cuts are ly on the way—and new cheap money will be good for stocks in the future.
The blem is that the market is nonetheless historically very high. Fortune’s Shawn Tully points out that the S&P 500’s price-to-earnings ratio just hit 30, which often signals impending doom.
“A PE of 30 means big cap stocks are really, really expensive by historical standards.
It also signals that from these heights, the chance for big returns going forward over any ext period are low, and the risks of a sharp ‘reversion to the mean’ downdraft is far more ly,” he wrote on Tuesday.
But the chatter among investors is that the market is ly to plough higher before a correction shows up—precisely because those Fed cuts appear to be baked in.
“For stocks, history suggests that the path ahead is ly higher, based on previous instances when the Fed cut rates when stocks were trading near or at record highs,” Adam Turnquist, chief nical strategist for LPL Financial in Charlotte, N.C., told clients in a note seen by Fortune this morning.
“From a nical perspective, it is hard to argue with a bull market that is making new highs and powered by cyclical leadership.
However, building overbought conditions paired with diverging market breadth suggest this melt-up could be due for some cooling off.” The S&P 500 is largely being driven by the Magnificent 7 stocks and the vast amount of investment and spending going on around AI.
If the fortunes of AI companies go into reverse, the repercussions will be serious. Without AI spending, the U.S. would be in recession, according to Deutsche Bank.
Yet the party is ly to continue, despite the fact that the U.S. stock are dependent on the fate of just seven—or maybe even just one—company.
“It’s fair to say expectations are that this surging AI capex spend won’t stop until there is a reason to doubt the potential fitability of it.
So, it will continue to be a big top-down theme of 2026,” Jim Reid and his team at Deutsche said in an this morning.
“Simplifying it, perhaps Nvidia, which employed only 36,000 people at the last earlier this year, holds the keys to all global macro in 2026!” Here’s snapshot of the ahead of the opening bell in New York this morning: S&P 500 futures were down 0.9% this morning.
The index closed down 0.28% in its last session. STOXX Europe 600 was down 0.49% in early trading. The U.K.’s FTSE 100 down 0.27% in early trading. Japan’s Nikkei 225 was up 0.27%.
China’s CSI 300 was up 0.6%. The South Korea KOSPI was flat. India’s Nifty 50 was down 0.4% before the end of the session. Bitcoin declined to $111.8K.Fortune Global Forum returns Oct.
26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of . Apply for an invitation.