Art Hogan predicts the Federal Reserve will disappoint the stock market by not cutting rates again this year.
But the National Securities chief market strategist believes it shouldn’t alarm Wall Street.
“The market is going to be OK with it,” Hogan told CNBC’s “Trading Nation” on Wednesday. “The market all of the sudden has broken out into a behavior that seems much more rational in September than it did in August.”
At its September meeting on Wednesday, the Fed slashed rates for the second time this year. CME Group data shows the market is pricing in a more than 50% chance of a rate cut next month. It’s also placing high odds on a December cut.
After the September meeting, Fed Chief Jerome Powell signaled that additional cuts hinge on whether the economy weakens.
“He’s trying very hard to say this is insurance, but don’t expect this to be a long pattern of rate cuts,” said Hogan. “They may well be at neutral right now. For them to say we’re going to continue to watch upcoming data just means yes, but we may be where we are.”
For now, Hogan sees growth ahead. He points out the U.S. is setting itself apart from the rest of the world with improving economic and earnings fundamentals.
Hogan suggests the market will have little choice but to cope with fewer cuts than its anticipating.
“This is a marketplace that is going to sit back and say ‘this is where we need to be on Fed policy for the time being’ and try to look at incoming data where good news can actually be good news,” he added.
Hogan has a 3,100 S&P 500 year-end price target, more than a 2.4% increase above the index’s all-time high. His 2020 price target is 3,300.