The Fed has opened the door to a “new bull market” in stocks, says Wall Street strategist Jim Paulsen.

• Jerome Powell’s Jackson Hole speech signaled a bull market clock reset, says Wall Street veteran Jim Paulsen.

• The Fed’s intention to cut interest rates is providing fresh support for stocks, Paulsen said.

• “I think it’s hard for a recession to find something to bite into, a vulnerability to bring us down,” Paulsen said.

Jerome Powell’s upbeat speech in Jackson Hole on Friday reset the clock on the stock market’s bull rally and opened the door for more gains.

Wall Street veteran Jim Paulse said in a CNBC interview on Friday that a “new bull market” in stocks is evident after the Federal Reserve confirmed its intention to cut interest rates.

“They opened up a lot more positive forces for the stock market that just weren’t there,” said Paulsen, who writes the Paulsen Perspectives newsletter after retiring from a 40-year career on Wall Street in 2022 .

He added: “This is the only bull market in postwar history that the Fed has been tight for its entire existence. Normally, the Fed relaxes before the bubble starts. So, in a way, I think the Fed is doing this. , takes us back to the beginning of the bull.”

Positive forces unleashed by the Fed include falling interest rates and bond yields and accelerating monetary growth, all of which have been absent for the current bull market that began in October 2022.

These forces, combined with positive real GDP growth and continued disinflation, should improve sentiment among business owners and consumers alike.

“If you put all of that together, something we haven’t had at all yet, we’re going to get an increase in private sector confidence. Consumer and business confidence, I think, will start to pick up as well, as will the feeling of a brand new bull market,” Paulsen said, adding that these conditions typically precede a broad rally in stocks.

A rising stock market in 2025 coincides with Paulsen’s bullish view of the economy, as he doesn’t see a recession happening anytime soon.

Paulsen pointed to strong consumer and business balance sheets and $6 trillion in money market funds as reasons for his optimism.

“I think it’s hard for a recession to find something to bite, a vulnerability to bring us down,” Paulsen said. “And when pessimism is still very high, meaning confidence is very low, it tells me that people have been quite conservative.”

Paulsen went on to say that it doesn’t matter if the Fed cuts interest rates by 25 or 50 basis points at the September FOMC meeting; all that matters is that officials will cut interest rates.

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“It’s not just the Fed doing 25 or 50, it’s the intention to ease monetary policy that opens up a new level of support for stocks that I think will persist into next year,” Paulsen concluded.

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