Market indexes (^DJI, ^IXIC, ^GSPC) are rolling strong, continuing to hit all-time highs in the fourth quarter as the Federal Reserve considers future interest rate cuts. "That should provide a little bit of a tailwind going forward. And that's really what's been boosting equities... day after day it seems like," NFJ Investment Group managing director and senior portfolio manager Burns McKinney tells Yahoo Finance.

McKinney sits down with Brad Smith to talk more about the "Goldilocks-type environment" for stocks, explaining the utilities sector's (XLU) turnaround from 2023's underperformance.

"As I noted, you don't want to fight the Fed. But that said, given the fact that you're looking at S&P with a price-to-earnings ratio of 23 times earnings, which over the last several decades, it's only been higher during a brief span in 2020 as well as during the Dot Com Bubble," McKinney says, adding: "And so there are a lot of aggressive assumptions baked in there. So in many ways that is priced for perfection. So what we're arguing is that, you know because the Fed does provide a tailwind. We do expect positive returns going forward, but it's really going to be you're not looking at... long bombs down the field."

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This post was written by Luke Carberry Mogan.