Is the AI-driven bull market still in the second half? New Federal Reserve Chair Worsh abandons forward guidance and hints that more rate hikes could still come this year

BlockBeats News. On June 22, new Federal Reserve Chair Kevin Worsh is pushing for a fundamental shift in how monetary policy is communicated. This Trump-appointed leader advocates reducing interventionist calls to the market, and instead letting the financial markets’ own pricing become the main source of signals guiding expectations for the economy and inflation—breaking with the Fed’s long-standing “forward guidance” tradition.

On the policy front, at its June meeting the Federal Reserve kept interest rates unchanged, but has already hinted that there may still be additional rate hikes within the year. As a result, the yield on 2-year U.S. Treasuries rose to around 4.177%, reaching a new high since February 2025. Current inflation is still above 4%, and the macro backdrop remains complex.

However, historical data shows that rate hikes do not necessarily end a bull market. Of the five tightening cycles since the 1990s, the S&P 500 rose during four of them, and in the 2015 to 2018 cycle the gain reached as much as 19%.

The core support for this bull market is still the AI investment boom. As of the latest trading day, the gaps between the S&P 500, the Dow Jones, and the Nasdaq and their historical highs are all within 2.1%. However, Societe Generale strategist Albert Edwards warns that current consumer growth is highly dependent on a decline in the savings rate rather than growth in actual income; year-over-year real income has already contracted. The market, to a large extent, relies on rising asset prices to maintain a wealth effect—once AI-driven premiums run out, the foundation of the bull market will face challenges.

Analysts generally believe that the Fed in the Worsh era means a market environment with higher volatility and less intervention. As long as the AI bubble has not yet burst, the bull market may still have a second half to look forward to.