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US stocks may have further room to rise despite elevated valuations, as the earnings and productivity gains generated by artificial intelligence are not yet fully reflected in equity prices, according to HSBC's Willem Sels. According to Bloomberg, Sels, global chief investment officer at HSBC Private Bank and Premier Wealth, said investors remain skeptical about the sustainability of corporate earnings growth, particularly among technology and semiconductor companies.

The Fed is likely to be less concerned that a rate hike will damage the labor market.

The current bull rally in equities, driven by massive AI CapEx, feels increasingly late-cycle and vulnerable to a correction. I see parallels between today's AI investment surge and past capital misallocations, such as the fiber-optic boom that failed due to the wildly inaccurate internet demand forecasts. Despite favoring high-quality, resilient, dividend-focused assets like infrastructure and internally managed BDCs (e.g., TRIN), equity risk remains pervasive.

The S&P 500 has risen about 2.6% since late June despite a global bond market selloff that pushed 10-year Treasury yields to a high of 4.815%.

The 10-year Bund yields reached their highest since 2011 and yields on U.K. 10-year government bonds climbed to their highest level since 2007.