The S&P 500 has been on a bull run for the past two years, fueled by the excitement around artificial intelligence and the resilience of the US economy. With a gain of over 60% and hitting all-time highs, many Wall Street experts believe the bull market still has room to grow.
According to Yahoo Finance, analysts are optimistic about the future of the S&P 500, citing accelerating earnings growth and a solid economic foundation as driving factors. Despite being two years in, this bull market is still below the average run length of 5.5 years and the average gain of 180%.
Recent predictions from experts like BMO Capital Markets and Goldman Sachs suggest that the S&P 500 could continue to climb higher through the end of the year and into 2025. However, concerns about stretched valuations have some strategists cautious about how much further stocks can go.
While high valuations are a concern, historical data shows that they alone may not signal the end of a bull market. Catalysts like rising interest rates or increased unemployment typically lead to market drawdowns, but with current economic conditions, those risks seem limited.
Looking ahead, experts believe that earnings growth will be a crucial factor in driving the market higher. Consensus estimates project healthy earnings growth in 2024 and 2025, with a focus on sectors that are accelerating their earnings rather than just maintaining steady numbers.
Artificial intelligence continues to be a key theme in the market, with the potential to drive earnings growth for companies beyond the tech sector. Analysts emphasize the importance of companies delivering on the promise of AI through improved margins and profitability metrics to sustain market growth in the coming years.
With a shifting narrative from macro-driven to fundamentals-based, investors should keep a close eye on earnings and the impact of AI on various sectors. As the market continues to evolve, understanding these key trends will be essential for navigating the ever-changing landscape of finance.
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