Stock Market View: A Fall Full of Questions

Historically speaking, equity markets loathe uncertainty – especially after an extended bullish price move. As Wall Street’s largest institutional investors start to return from their summer vacations, five important questions loom.Fed Independence in QuestionMost investors see the US Federal Reserve’s independence as a cornerstone of its monetary policy decisions. Through long and staggered service terms and complete operational independence, the body is supposed to be shielded from political forces. While both sides of the aisle claim the other side is seeking to control the Fed, both parties are guilty. For instance, in 2024, Democrat Senator Elizabeth Warren wrote a letter to Fed Chair Powell saying that the “Fed must cut by 75bps on September 18th.” Just one year later, Warren said, “What you are doing (by pushing for lower rates) will take an axe to Fed Independence.” Meanwhile, the Republicans are just as guilty. President Trump and his economic team have been pushing Fed Chair Powell to cut rates for months.How will Investors React to the Cook Firing Attempt?As if the typical political double-speak was not enough confusion for markets, the picture got even murkier when President Trump fired Fed Governor Lisa Cook. President Trump fired Cook based on allegations of mortgage fraud from Federal Housing Finance Agency head Bill Pulte. The Federal Reserve Act allows a president to fire a Fed Governor for cause, but this is the first time a president has done so. Cook has vowed to fight the firing. Regardless of the outcome, the overhang over the US Central Bank will likely weigh on markets until there is a resolution.Will the Courts Overturn Trump Tariffs?In April, President Trump’s ‘Liberation Day’ tariffs led to the first bear market since 2022. Though the tariffs were far higher than investors anticipated, Trump merely used a “Shock and bore” approach to negotiate better trade deals with major trading partners such as the EU. After a few weeks of sliding markets, investors caught onto Trump’s strategy and stocks rallied strongly in one of the fastest rebounds in history, eventually printing all-time highs. However, as soon as the market seemed to have adjusted to the Trump tariffs, President Trump suffered a huge setback with many of his administration’s tariffs being ruled illegal by a federal appeals court late last week. The Trump administration will likely appeal the ruling, and the tariff dispute should reach the Supreme Court. Regardless of which way the verdict goes, the fact that such a significant market force is in limbo will likely cause skittishness among investors.Is Stagflation a Concern?The economy is in an interesting position currently. GDP growth is above 3% but this morning’s jobs number was the worst in a long time. For the first time since April 2021, the US now has more unemployed people than job openings. With the Fed expected to cut interest rates in September, the jobs market should get a boost. However, the question on investors’ minds is, “Is stagflation around the corner?” For now, GDP remains strong, but a weak jobs market could be the first signal of a potential slowdown. Meanwhile, inflation is essentially in check, though many investors worry that lower rates could ignite higher inflation.Will September Seasonality Kick in?Historically, September has been a weak month for stocks, especially in a post-election year like 2025.  Stocks tend to set local highs in September that precede October rebounds. Will this time be different?Bottom LineThis fall promises a confluence of factors that could inject significant volatility into equity markets. Unprecedented political pressure on the Fed and tariff court battles are at the forefront of the uncertainty.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks