AI buildout is not just benefitting the megacap tech trade, says Charles Schwab's Liz Ann Sonders

Summary

Liz Ann Sonders discusses the rotational nature of the market, emphasizing that the AI infrastructure buildout is broadening beyond megacap tech. She also comments on Fed policy, stating that rate cuts are off the table and a hike is increasingly likely. The conversation touches on the impact of large IPOs and the shift in capital flows.

• The market experienced a rebound after a volatile week, with a rotation away from overbought conditions.
• Liz Ann Sonders highlights that the AI buildout benefits a broader set of stocks, not just large-cap tech.
• She notes that the Russell 2000 has been outperforming the S&P 500.
• Non-profitable names within the Russell 2000 are catching up.
• Equal-weight and cap-weight indexes are converging, indicating broader participation.
• Sonders believes the Fed will not cut rates; rate cuts are off the table and a hike is possible.
• Market pricing implies a 75% chance of a rate hike by year-end.
• The first Fed meeting under Kevin Warsh will focus on communication framework changes.