Corporate profits in the S&P 500 are outpacing earlier expectations, potentially giving the benchmark index room to extend its rally, analysts at Yardeni Research said in a client note.
The team pointed out that forward earnings estimates — which aggregate projections from industry analysts for this year and next — are now aligning with the 2026 forecast. As of the week of September 4, that projection stood at $304.12.
Using the S&P 500’s current forward price-to-earnings multiple of about 22.0, that figure implies the index could reach 6,600 by the end of 2025, they said.
The strategists cautioned that swift and steady gains in the index are “typically followed” by broader pullbacks. However, they argued that a correction may be avoided if the market’s momentum has “fundamental support from strong earnings.”
“The bull market in stocks that began after the pandemic lockdowns has been primarily driven by earnings,” the analysts wrote. “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.”
On Tuesday, S&P 500 futures traded modestly higher ahead of the government’s preliminary nonfarm payrolls benchmark revision, with investors also awaiting fresh inflation data later in the week.
Wall Street had already closed higher on Monday, with the S&P 500 ending at 6,495.15. Traders have been increasingly betting that the Federal Reserve will soon cut interest rates to cushion a softening U.S. labor market.
In single-stock moves, retail brokerage Robinhood and software firm AppLovin advanced after being tapped for inclusion in the S&P 500 index. Chipmaker Broadcom also climbed 3.2%, adding to recent gains after the company reiterated expectations for robust AI-driven revenue growth.
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