Record‑High Stocks Amid Cautious Sentiment: Yarndeni’s “Fed Put” Thesis Explained

Stocks keep climbing even as investor sentiment gauges lag, yet Yarndeni Research argues the “Fed put” is alive and well—ready to soften any tariff‑driven slowdown. Here’s a concise, data‑driven look at why the bull run has room to run.

Sentiment vs. Price Action

Investor Intelligence and AAII bull‑bear ratios remain low despite new highs, reflecting lingering recession fears.

Citigroup’s Economic Surprise Index sits in negative territory, and Q1 GDP was revised down to –0.5%.

Personal income and spending dipped in May, and continuing jobless claims are inching higher.

Low sentiment amid rising prices often precedes sustained rallies—bull markets climb a “wall of worry.”

Cyclical Leadership and Sector Signals

Four of the five best‑performing S&P 500 sectors YTD are cyclical: Industrials, Communication Services, Financials, and Information Technology.

This rotation underscores optimism around tech capex, onshoring and expanding capital markets.

Pull live sector P/E ratios via the Sector P/E Ratio API to see which groups remain attractively valued versus history.

The “Fed Put” Is Back

Yarndeni forecasts two Fed rate cuts by year‑end if growth stumbles, a view echoed by futures markets pricing in four cuts over the next 12 months.

Lower rates would lift long‑duration assets and cushion tariff‑related growth headwinds.

Conclusion

Record highs amid cautious sentiment and cyclical leadership point to a bull run underpinned by a looming “Fed put.”