Earnings-Led Meltup?

On second thought: A stock market meltup might be alright after all. A meltdown needn't follow it if it is an earnings-led meltup rather than a valuation-led meltup! The bull market in stocks that began after the pandemic lockdowns has been primarily driven by earnings. We've been bullish on the economy, earnings, and the stock market since the March 23, 2020 bottom in the S&P 500. We've been bullish again on all three this year. However, earnings are growing even faster than we expected.

We've been expecting S&P 500 forward earnings to hit $300 per share by the end of this year. It is on track to exceed our expectations. Forward earnings is the time-weighted average of industry analysts' consensus expectations of earnings for the current year and the coming year. It is currently converging toward the 2026 consensus earnings outlook, which was $304.12 during the week of September 4 and is rising (chart).