S&P 500, SMidCaps Show Broader Earnings Gains as Strategists Keep 10,000 Decade-End Target
Updated
Updated · yardeniquicktakes.com · May 19
S&P 500, SMidCaps Show Broader Earnings Gains as Strategists Keep 10,000 Decade-End Target
1 articles · Updated · yardeniquicktakes.com · May 19
Earnings breadth is improving across the S&P 500 and among SMidCaps, suggesting the AI-driven bull market is starting to spread beyond a handful of mega-cap winners.
Since the Oct. 12, 2022 bull-market low, the S&P 500 has gained 107.0%, but only Information Technology at 225.7% and Communication Services at 212.3% have outperformed the index.
Strategists argue the current run looks less extreme than the late-1990s tech bubble: tech's forward P/E is 24.3 versus the S&P 500's 21.1, far narrower than the roughly 20-point spread then.
The two AI-linked sectors now make up 48.0% of S&P 500 market cap and 42.9% of forward earnings, a closer alignment than the 40.2% market-cap share versus about 24.0% earnings share seen in the tech bubble.
Even with the Buffett Ratio at a record high, the firm says broader AI-led productivity and profit growth could sustain the rally and support its 10,000 S&P 500 target by decade-end.
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