Expectation of Fed rate cut in June will support share prices: CFRA's Stovall

Speakers

Sam Stovall — Chief Investment Strategist at CFRA

Tim Seymour — Seymour Asset Management, Fast Money Trader

Summary

Tim Seymour advocates for a "barbell" investment strategy, balancing high-growth Semiconductors with defensive/cyclical plays like Health Care and Energy.
Sam Stovall predicts a Federal Reserve rate cut in June, driven by expectations of softening labor data and declining CPI, which he believes will propel equity prices higher.
Market breadth is improving technically; Stovall notes that 30 sub-industries recently reclaimed their 50-day and 200-day moving averages, signaling a rally that extends beyond just big tech.
Investors are closely watching upcoming payroll data and CPI reports to gauge the health of the labor market and the trajectory of inflation.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
S&P 500 /GENERAL EQUITIES	LONG	Sam Stovall Chief Investment Strategist at CFRA	Stovall expects the market to be supported by a potential Fed rate cut at the June meeting. The "bad news is good news" dynamic is in play. Stovall anticipates weak economic data—specifically a low payroll number (around 55k) and declining year-over-year CPI. This economic softening would pressure the Fed to cut rates, which lowers borrowing costs and typically boosts stock valuations. Expectations of Q4 GDP (cited between 4.2% and 5.4%) combined with anticipated declines in headline and core CPI. If inflation remains sticky or economic data comes in too hot, the Fed may delay rate cuts, hurting asset prices.	2:58
HEALTH CARE /SEMICONDUCTORS /ENERGY	LONG	Tim Seymour Seymour Asset Management, Fast Money Trader	Seymour identifies a "barbell approach" to the current market, highlighting that Semiconductors (specifically NVIDIA) continue to outperform, while Health Care and Energy are also working. This strategy balances aggressive growth (Semis) with value/cyclicals (Energy/Health Care). Seymour argues the economy is in better shape than perceived; specifically, the Energy sector performs well as long as the labor market remains stable and people have jobs. Semis are "outperforming once again," and Energy/Health Care are showing strength alongside them. A significant deterioration in the labor market (Payrolls) could undermine the thesis for the cyclical side of the trade.	1:08
GLOBAL BANKS /DIVERSIFIED METALS /TECH HARDWARE	LONG	Sam Stovall Chief Investment Strategist at CFRA	Stovall points to specific sub-industries that are participating in a broadening market rally. This is a technical momentum trade. These specific sectors have recently moved back above both their 50-day and 200-day moving averages. When price crosses above these averages, it often signals a shift from a downtrend to an uptrend and indicates healthy market breadth. 30 sub-industries moved above these key technical levels last week, with these three sectors explicitly named as leaders. A reversal in the broader market could cause these sectors to fall back below support levels.	3:20