The S&P 500 continues to show strength as the decade progresses. Following recent data, year-end targets for the index have moved to 8,400 with a long-term goal of 10,000 by the end of the decade. This growth is supported by what is described as fabulous earnings momentum, or FEMO, which is pushing the market higher across both large and small-cap stocks.
Market breadth remains a key feature of the current run. While the Magnificent-7 stocks have been a primary focus, the Impressive-493 is currently outperforming them year-to-date. This suggests the rally is moving beyond a small group of companies, supported further by record highs in the Russell 2000 index, which reflects optimism in the broader economic outlook.
Earnings growth remains a driving force. Second quarter earnings rose significantly, and analysts expect this trend to continue through the third and fourth quarters. Profit margins are reaching record levels, currently projected at 16.5% for forward estimates. With forward revenue and earnings rising across market caps, the data shows that this momentum is broad-based rather than concentrated in one sector.
Despite the positive performance, institutional sentiment is showing signs of extension. Bullishness among investors is high, which often serves as a point of caution. However, the bond market presents a different signal, as the Citigroup Economic Surprise Index has dropped recently. If bond yields ease as the index suggests, it could provide additional support for equity valuations in the coming months.