It’s almost as if the stock market doesn’t care if the Fed raises interest rates another quarter point in June, skips a meeting and waits until July to decide again, or signals a complete pause in its campaign to kill off inflation through tighter monetary policy. . Regardless of the outcome of the next Fed meeting or two, investors have largely decided that the central bank is done raising rates or close enough that it won’t make much of a difference to stocks anymore. After all, the Fed raised rates five percentage points in less than 15 months, to the current 5.00-5.25%. Friday’s big growth in nonfarm payrolls of 339,000 new jobs in May, for example, was offset by other details, such as a rebound in the unemployment rate to 3.7% and a small decline in year-over-year earnings to 4.3%, “suggesting that the Fed may possibly raise one more time in June and then pause, but … they may slow down their rate hikes,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. . “The underlying numbers in today’s report show that the Fed can probably get comfortable with maybe one more rate hike and then a pause.” Late on Friday, the CME FedWatch Tool, derived from 30-day federal funds futures prices, gave just a 30% chance of another quarter-point interest rate hike at the board meeting. Fed June 13-14. The odds of a rate hike were higher, almost 70%, by the time the subsequent meeting concludes on July 27. it’s the narrow lead found in this year’s 11.5% gain in the S&P 500, and the fact that only a handful of stocks are carrying the rest of the market on their shoulders. At least in the “Go-go market” of the 1960s and early 1970s there were the Nifty 50s. Today, the lead has narrowed even further, to just the Magnificent 7. The thinking in the corner of Broad and Wall was summed up in a Canaccord Genuity report earlier in the week headlined: “Market breadth needs to improve or a medium-term stock market correction looms.” Or, as JC O’Hara, Roth MKM’s chief market technician, put it, expressing the same point, “Mega Caps Can’t Party Alone.” That’s a Horneman concern, too. “The market is completely driven by AI and any kind of technology-related name,” she said. “Our concern is that it’s getting a bit foamy there, and that could be a valuation correction,” driven by no catalyst other than “valuations get too high and people start to take profits.” Some investors are already going public with their sales of at least some of their positions in Nvidia, for example, now that the AI chipmaker has soared nearly 170% since the start of the year. Or, at least, those concerns were true until Friday’s explosive rally, when nearly six issues on the New York Stock Exchange rose for every one that fell, and all 11 S&P 500 sectors gained. Friday’s advance brought the S&P 500 to its highest level since Aug. 18, 2022, when the benchmark index closed at 4,283.74. “I think this breakout has legs, but it won’t be a straight line up and to the right,” said Ross Mayfield, investment strategy analyst at Baird. “Overall, we like the market setup – falling inflation, consumer resilience, strong labor market, better-than-expected earnings and the Fed almost done – but we expect volatility to reappear in the second half of 2023 as Debate over recession intensifies. Another favorable drop in the wind may simply be the fact that the 11.2% rally in the S&P 500, right from the mid-March lows that accompanied the Silicon Valley Bank failure, is so hated and mistrusted. . “Wall Street is full of low-conviction bears,” Bank of America equity strategist Savita Subramanian headlined a report on Thursday. Subramanian highlighted a proprietary internal “sell-side indicator” used by BofA, writing that it is “leaning towards a ‘buy’ signal” in US stocks. Sell-side strategists were only recommending a 52.5% allocation to US stocks in May, she said, just 1.1 percentage points short of the 51.4% advice it would take to trigger a buy-out signal. . That’s the closest that gauge has come to offering a buy signal for US stocks in more than six years, Subramanian said. Weekly Schedule Monday 9:45am: S&P Global Services PMI (May) 10am: Durable Goods & Factory Orders (April) 10am: ISM Services PMI (May) Tuesday Earnings: JM Smucker, Cracker Barrel , Calavo Growers , Ciena Wednesday 8:30 am: Trade Balance (April) Earnings: Campbell Soup, Brown-Forman, GameStop, Semtech Thursday 8:30 am: Initial Jobless Claims (week ending May 27) 10 am: Wholesale Inventories (April) — CNBC Alexander Harring, Fred Imbert and Michael Bloom contributed to this report.