Raymond James sees equity markets trending higher as new rally phase begins

Investing.com - Raymond James maintains a bullish outlook on equity markets, noting that "the path of least resistance for equity markets remains higher" as a new short-term rally phase gets underway. This optimism appears well-founded, with the S&P 500 currently trading near its 52-week high of $664.89 and showing an impressive 18.36% return over the past six months. InvestingPro data reveals the index has maintained consistently low price volatility, suggesting stable market conditions.

The firm points to new daily mechanical buy signals triggered last week by the S&P 500 and Nasdaq 100, joining the TSX Composite and Russell 2000 which were already showing positive indicators consistent with short-term rally phases lasting 2-4 weeks.

Raymond James believes a new 4-Year Cycle began at the April 8th market lows, suggesting the start of a 3-5 year cyclical bull market. The firm notes that if markets can hold through September’s seasonal weakness, positive seasonality from October through December should support higher prices into year-end.

Despite the positive outlook, Raymond James identifies five developing technical negatives that suggest an intermediate-term corrective phase lasting 1-3 months may be approaching. However, the firm views any such correction as an opportunity to add exposure, particularly in cyclical market areas.

The firm’s longer-term cycle analysis indicates the current 4-Year Cycle should have upside potential extending into the second half of 2027 or first half of 2028, according to their July 3, 2025 technical perspectives report. For investors seeking deeper insights into market cycles and valuations, InvestingPro offers comprehensive technical analysis tools and over 30 additional key metrics not mentioned in this report.

In other recent news, Goldman Sachs has revised its third-quarter GDP growth forecast to 1.6%, down from 1.7%, due to a widening trade deficit influenced by increased imports from China and gold. Meanwhile, Bank of America has adjusted its Federal Reserve forecast, now anticipating two 25-basis-point interest rate cuts in 2025, citing weak labor market data as a significant factor. Additionally, Raymond James has identified small cap value as the only investment style trading below its long-term price-to-earnings average, noting a strong second-quarter earnings season with positive revisions in eight of 11 market sectors.

In a related development, TD Cowen analysts suggest a 60% chance that the SEC might shift from quarterly to semi-annual reporting for public companies, following discussions with the Long-Term Stock Exchange and renewed interest from President Trump. Former St. Louis Federal Reserve President James Bullard commented on the recent 25-basis-point interest rate cut by the Fed, expressing expectations for a total of 75 basis points in cuts by year-end. These developments highlight shifts in economic forecasts and regulatory considerations impacting the investment landscape.

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