The recent US stock market rally is primarily driven by robust corporate earnings rather than market valuations. However, the AI-led momentum in the S&P 500 is facing headwinds from tightening liquidity and a strong jobs report that reinforced 'higher for longer' interest rate expectations. Furthermore, Wall Street consensus indicates decelerating earnings growth for major indices, while tech giants like Google and Meta are shifting capital allocation through massive equity and debt issuances.
Wall Street consensus points to a cooling trend for mega-cap earnings growth, potentially limiting the upside for concentrated indices like the S&P 100.
Read the full storyAnalysis reveals that robust profit growth, rather than speculative multiple expansion, is the fundamental driver behind the current S&P 500 rally.
The S&P 500's AI-led momentum is unwinding as tightening liquidity and a hot jobs report reinforce expectations for prolonged high interest rates.