Charles Schwab: U.S. inflation still faces upside risks, expects the Federal Reserve to cut rates two to three times this year

Glonghui, January 28｜Charles Schwab Hong Kong released its 2026 global and US market outlook. Kevin Gordon, Head of Macroeconomic Research and Strategy at Schwab Center for Financial Research, expects that if fiscal support expands, the labor market remains stable, and consumer spending is sustained, there will still be upside risks to US inflation this year, which may limit the Federal Reserve to only two or three rate cuts throughout the year. He emphasized that the market is currently in a state of ongoing dynamic equilibrium, leading to rapid shifts of capital between different investment styles and significant dispersion within sectors. It is expected that AI will continue to dominate capital allocation and corporate strategies. However, he pointed out that the impact of AI investment is maturing, and whether corporate stock prices can continue to rise in the future will depend on whether their valuations are supported by substantial profit growth, rather than being driven solely by speculation. Therefore, a robust earnings outlook will be key to supporting stock prices.