Fundstrat
Q4 Pullback or New Highs Ahead? | Fundstrat's Mark Newton Explains
10/15/2025, 8:13:25 PM
Economic Summary
- Seasonality and cyclical context are constructive: this is the fifth year of the decade and post-election patterns can be bullish, suggesting tailwinds into year-end.
- Breadth is beginning to improve as the equal-weight S&P recently hit new highs, signaling that financials, healthcare, and industrials are participating beyond mega-cap tech.
- AI cycle is driving outsized earnings growth for leaders (e.g., NVDA, AMD), and CEOs report strong demand, allowing valuations to remain elevated in the near term.
- Monetary policy is expected to ease: markets are pricing multiple Fed cuts over the next year, which would be supportive for risk assets if realized.
- Labor data is softening (ADP miss, muted jobs prints), indicating hiring has slowed rather than massive layoffs — a bifurcated labor market that complicates Fed decisions.
Bullish
- AI boom is in early innings and is driving strong earnings growth.
- Equal-weight S&P making new highs indicates broader market participation beyond mega-caps.
- Government support for select companies (e.g., Pfizer, Intel) has buoyed sectors like health care.
- Market is pricing in Fed easing (multiple cuts), which would be supportive for equities.
- Seasonality (fifth year of a decade and post-election patterns) tends to be bullish.
Bearish
- Market breadth is weakening; a small number of leaders are driving gains while many stocks lag.
- A choppy 3-5% pullback is likely in the November window (short-term correction risk).
- Heavy concentration in MAG-7 names raises concentration and valuation risk for the broader index.
- Rising bullish sentiment could serve as a contrarian sell signal if it becomes extreme.
- Slowing hiring and weak ADP/jobs signals create macro uncertainty that could pressure markets.
- AI-related deal circularity between vendors (NVIDIA/AMD/etc.) could amplify downside if fundamentals disappoint.
Bullish tickers
NVDAAMDPFEINTCAAPL
Bearish tickers
NVDAAMDAAPL
NVDA
Bullish
Primary AI leader with overwhelming demand; could justify extended multiples as AI cycle matures.
Bearish
Concentration risk: if leadership in AI fades or breadth deteriorates, NVDA could see pronounced weakness.
AMD
Bullish
Direct beneficiary of AI partnerships; recent OpenAI-related news drove a strong rally.
Bearish
AI hype and circular deal narratives (OpenAI/partners) could reverse if fundamentals disappoint.
AAPL
Bullish
Strong earnings contribution to indices and a core MAG-7 driver of market performance.
Bearish
Part of the concentrated mega-cap group; vulnerability if rotation away from tech accelerates.
PFE
Bullish
Recent government engagement/support boosted healthcare names and helped lift sector sentiment.
Bearish
Political scrutiny over drug pricing could pressure sentiment despite short-term support.
INTC
Bullish
Benefited from administration support as a strategic domestic chip play.
Bearish
Execution risks relative to other AI chip suppliers could limit upside if competition accelerates.
JPM
Bullish
As a large bank and early earnings reporter, JPM can lead into earnings season and benefit from broader market strength.
Bearish
Financials can lag if rate cuts compress net interest margins.
PEP
Bullish
Stable consumer staples name often used as a defensive earnings indicator in early seasonality moves.
Bearish
Consumer and margin pressures could weigh if inflation dynamics worsen.
DAL
Bullish
Positive earnings or travel demand recovery can act as a cyclicality signal for broader risk appetite.
Bearish
Airlines are sensitive to travel demand and fuel costs; downside if macro weakens.
People mentioned
Mark NewtonKenDonald TrumpJensen HuangJerome PowellScott Bassan