The widely followed S&P 500 index has recently reached an all-time high! More importantly, it was able to close at a four-month high — a strong 6,173.07. This new milestone breaks the old record of 6,147.43 and does so as investors are reacting positively to improving conditions across the market. The increase comes following an extremely difficult period earlier this year. As it was back then, the index is getting hammered – down almost 18% due to global trade fears and tariff wars.
In early May, the S&P 500 rocketed upward, surprising many investors with a 4.4% monthly return. That’s a great sign of recovery from all-time lows. Analysts attribute the turnaround to increasing optimism among investors. They further cite a strong earnings forecast for Q2 2023. The year-over-year earnings growth rate expectations for the S&P 500 have come down to a 5% estimate. Forecasters fear it might be as low as 0.5% growth which would be the weakest quarterly rate since Q4 of 2023.
To date, over 110 of these S&P 500 companies have issued quarterly EPS guidance for the second quarter. These transparent, public updates help shed light on these projects’ unlikely success. Remarkably, 51 companies have already provided positive EPS guidance. It’s a big jump from the five-year average of 42 and even the ten-year average of 39. On the flip side, 59 companies have provided negative guidance, creating a see-sawing earnings scene.
Market analysts would keep a close eye on the S&P 500 as U.S.-China trade talks continued on an almost daily basis. In the words of Ken Mahoney, CEO, Mahoney Asset Management… We’re in a market climate with the highest level of skepticism.
“The bearish narratives—Middle East conflict, tariffs, soft economic data—keep getting invalidated by the price action.” – Ken Mahoney, CEO of Mahoney Asset Management
Mahoney went on to stress that the current market’s resilience proves its power to “weather storms.”
“Every chance the market has had to break down has failed. Instead, it continues to do what bull markets do best: climb the wall of worry. We think this run can continue, not without volatility to the downside of course.” – Ken Mahoney, CEO of Mahoney Asset Management
This week, the Dow Jones Industrial Average jumped almost 1% as well, a strong performance to match the S&P 500’s recent rally. At the same time, the tech-heavy Nasdaq Composite rose roughly 0.5% to a record close. This upward momentum for these indices is a promising sign of increased investor confidence in the stability and recovery of the market at large.
John Butters, FactSet’s senior earnings analyst, provided insights into recent earnings guidance trends, reinforcing the notion that many companies are optimistic about their financial outlook despite some negative forecasts.
Futures for the S&P 500 were up by roughly a tenth of a percent. Traders and institutional investors remain particularly on edge, constantly looking at the implications of global trade agreements on shifting market alliances and relationships.