The rise in corporate earnings within the S&P 500 has exceeded expectations and has become one of the key factors supporting bullish sentiment on Wall Street. Yardeni Research notes that the earnings-per-share forecast for the index’s companies in 2026 has reached $304.12, which, with the current forward P/E of about 22, corresponds to a target level for the S&P 500 of around 6,600 points. According to Strategic Insights experts, it is precisely such divergences between expectations and actual dynamics that often become turning points when the market shifts from doubt to sustainable growth.
Analysts emphasize that the current rally resembles the situation after March 2020: back then, the bull market was also driven not by speculative capital but by earnings growth. Today, the dynamic repeats itself – companies are demonstrating the ability to earn more even under conditions of high borrowing costs and inflationary pressure. This changes the perception of the S&P 500: the index no longer looks overheated, but rather fundamentally justified.
Yardeni Research adds that fears of a deep correction should not dominate if growth has genuine support. And such support is evident: corporate reports show positive trends, and new forecasts are forcing analysts to revise estimates upward.
YourDailyAnalysis commentary: On the micro level, growth drivers are diversified. Shares of AppLovin and Robinhood rose after being added to the index, while Broadcom strengthened by more than 3% on strong AI-related expectations. This confirms that profitability is being supported not by a single sector, but by several at once – from technology to fintech.
The macro backdrop also plays a role. Investors are awaiting employment and inflation data, while expectations of Fed rate cuts are pushing indices higher. But, as Yardeni emphasizes, it is earnings – not monetary policy – that remain the primary factor of resilience.
Strategic Insights conclusion on YourDailyAnalysis: EPS acceleration is not just a figure in a report but a structural signal for the market. It forms a long-term foundation capable of keeping the index on a growth trajectory even amid fluctuations in monetary policy. For investors, the key lesson is that earnings remain the most important indicator: over the long horizon, it is profits that determine the direction of the stock market.
