MARKET CALL: Party Like It's 1999!?

The DJIA, S&P 500, Nasdaq, and Russell 2000 all rose to record highs this past week. All were boosted by the Fed's decision to cut the federal funds rate by 25bps on Wednesday. Is the stock market back on the road to the same irrational exuberance that inflated the Tech Bubble of 1999, which was followed by the Tech Wreck of the early 2000s? Will the theme song for 2026 be "Party Like It's 1999!"?

Perhaps. However, the S&P 500 has been driven to new highs this year by better-than-expected earnings. S&P 500 forward earnings per share rose to a record $294.91 during the September 18 week, on its way to converging at year-end with the analysts' consensus for 2026 (chart). The latter continues to rise, reaching $304.88 this past week. (FYI: Since forward earnings is the time-weighted average of analysts’ consensus estimates for the current and following years, it always matches the following year’s estimate at year-end.)