Stocks soared yesterday with the tech-heavy Nasdaq and S&P 500 leading the way with gains of 2.26% and 1.49%.

As I have been saying ever since last Wednesday's interest rate hike (actually, even before that) ? I believe Wednesday's Fed move marked the beginning of the next leg up in the market.

For one, it was widely expected. And much of the recent selling was likely done in anticipation of the hike. (Buy the rumor, sell the fact, as they say.) And two, the Announcement painted a bullish picture for the economy.

The Fed's Summary of Economic Projections (SEP) only shows one more quarter-point hike is expected by year's end (to 4.1%, which is up from the current midpoint of 3.88%), and no new hikes in 2027. Moreover, it begins falling after that with the longer run rate at 3.2%. Not as hawkish as some had feared.

And the SEP shows PCE inflation (headline) at 3.7% this year, but falling to 2.3% in 2027. That's vs. previous expectations for 3.6% and 2.3%, which is not much of a change. Core PCE is forecast at 3.4% this year and 2.5% next year vs. 3.3% previously and 2.5%. Again, not much of a change. And it suggests rates could very well start falling sooner rather than later.

Additionally, the SEP also showed the Fed raising their GDP outlook for 2026 to 2.3% (up from June's projection of 2.2%), with 2027 at 2.4%, up from June's 2.3% estimate. (Mr. Warsh noted that "the economy's output is solid," and that "capital expenditures and productivity are strong.")

The unemployment rate is pegged at 4.1% for this year and next (where it is now). That's down from June's forecast of 4.3% for both years. (Mr. Warsh also said that "current unemployment rates are consistent with full employment," and that "labor markets are solid and steady.")

All in all, it was a bullish Announcement for the economy and the market. And stocks are cheering the news.

I also believe it coincides perfectly with the 3 month-long pullback and consolidation in the semiconductor/AI space. And with the Announcement now behind us, I believe it's ready to breakout to new highs.

Many had prematurely written off the AI trade as dead. But it's alive and well. In fact, it's accelerating. And I believe it's got years more ahead of it, as it transforms the economy. And for those properly positioned, the potential to transform their portfolio.

Let me remind, as we head into Q4 (less than 2 weeks away), which is historically the best quarter of the year (since 1950, the S&P has gone up 79% of the time, with an average gain of 4.1%), not to mention the start of the next earnings season (stocks typically go up during earnings season), I am expecting a big rally into the end of the year.

And when that's done. I'm expecting the same thing again in 2027.

So make sure you're taking full advantage of it.

See you tomorrow,