Stocks Extend Rally on Economic Optimism Despite Lingering Risks

Stock market rally has momentum despite worries about inflation and interest rates due to brighter economic outlook and earnings growth forecasts.

There's optimism the Fed can achieve a "soft landing" by taming inflation without triggering a recession. This would extend the rally.

The Fed's projected rate cuts are just "the cherry on top" of an improved macroeconomic picture, not the sole driver of stocks.

Risks remain, like the Fed keeping rates too high for too long and sparking a downturn, or stocks being at historically high valuations.

Some strategists think the rally could continue with another 5-10% gain this year, favoring small caps over big tech.