The U.S. Federal Reserve has signalled that further interest rate cuts are likely on the way—and new cheap money will be good for stocks in the future.

The problem is that the market is nonetheless historically very high. Fortune’s Shawn Tully points out that the S&P 500’s price-to-earnings ratio just hit 30, which often signals impending doom. “A PE of 30 means big cap stocks are really, really expensive by historical standards. It also signals that from these heights, the chance for big returns going forward over any extended period are low, and the risks of a sharp ‘reversion to the mean’ downdraft is far more likely,” he wrote on Tuesday.

But the chatter among investors is that the market is likely to plough higher before a correction shows up—precisely because those Fed cuts appear to be baked in.

“For stocks, history suggests that the path ahead is likely higher, based on previous instances when the Fed cut rates when stocks were trading near or at record highs,” Adam Turnquist, chief technical strategist for LPL Financial in Charlotte, N.C., told clients in a note seen by Fortune this morning. “From a technical perspective, it is hard to argue with a bull market that is making new highs and powered by cyclical leadership. However, building overbought conditions paired with diverging market breadth suggest this melt-up could be due for some cooling off.”

The S&P 500 is largely being driven by the Magnificent 7 tech stocks and the vast amount of investment and spending going on around AI. If the fortunes of AI companies go into reverse, the repercussions will be serious. Without AI spending, the U.S. would be in recession, according to Deutsche Bank.

Yet the party is likely to continue, despite the fact that the U.S. stock markets are dependent on the fate of just seven—or maybe even just one—company.

“It’s fair to say expectations are that this surging AI capex spend won’t stop until there is a reason to doubt the potential profitability of it. So, it will continue to be a big top-down theme of 2026,” Jim Reid and his team at Deutsche said in an email this morning. “Simplifying it, perhaps Nvidia, which employed only 36,000 people at the last update earlier this year, holds the keys to all global macro in 2026!”

Here’s snapshot of the markets ahead of the opening bell in New York this morning:

S&P 500 futures were down 0.9% this morning. The index closed down 0.28% in its last session.STOXX Europe 600 was down 0.49% in early trading. The U.K.’s FTSE 100 down 0.27% in early trading.Japan’s Nikkei 225 was up 0.27%.China’s CSI 300 was up 0.6%.The South Korea KOSPI was flat.India’s Nifty 50 was down 0.4% before the end of the session.Bitcoin declined to $111.8K.