Key Takeaways:
The S&P 500 just completed its strongest eight-week run in nearly 70 years, and history suggests more gains lie ahead.
The S&P 500 rose 0.61% to 7,519.12 on Tuesday, extending its winning streak to eight weeks with a cumulative 17.3% gain — the second-strongest such run since 1952.
"This is FEMO, not FOMO — fabulous earnings momentum, not fear of missing out," said Ed Yardeni, president of Yardeni Research, who raised his year-end S&P 500 target to 8,250, the highest on Wall Street.
The rally has been fueled by earnings upgrades that have outpaced price gains. Forward earnings-per-share estimates for S&P 500 companies have risen 14.4% year-to-date, compared with the index's 9.2% price advance, compressing the forward P/E multiple by more than 4%. Goldman Sachs joined the upgrade cycle, raising its target to 8,000 from 7,600, citing "exceptionally strong" first-quarter results. The Nasdaq Composite also closed at a record, while the Dow Jones Industrial Average held near its all-time high. The Magnificent Seven tech companies and the broader S&P 500 reported their highest earnings growth rates since 2021, at more than 63% and 17%, respectively, according to FactSet.
The S&P 500 now sits about 6.5% from the 8,000 milestone. Bespoke Investment Group data shows that after prior eight-week streaks with gains exceeding 15%, the index delivered positive returns one year later 100% of the time, with a median gain of 17.57%. Even across all eight-week winning streaks, the probability of a positive return after 12 months stands at 89%.
The rally's breadth has been notable. All 11 GICS sectors participated in the advance, led by information technology and semiconductor stocks. Micron Technology surged nearly 20% on Tuesday, becoming the 12th U.S. company to exceed $1 trillion in market capitalization, though some traders attributed the move to options-driven gamma squeezing rather than fundamental demand signals. The Philadelphia Semiconductor Index also hit a record. Consumer discretionary and communication services outperformed, while energy and utilities lagged as the weakest sectors.
The U.S. 10-year Treasury yield stood at 4.467%, while gold traded at $4,494.90 an ounce and crude oil at $90.16 a barrel, reflecting cross-asset conditions that have not derailed the equity rally. The CBOE Volatility Index, or VIX, remained subdued at 16.97, well below its trailing one-year average, indicating low demand for portfolio hedges. The U.S. dollar index held steady, providing no additional headwind for multinational earnings.
History as a tailwind
The eight-week winning streak is the longest since December 2023 and the strongest in magnitude since 1952, according to Dow Jones Market Data. Carson Investment Research chief market strategist Ryan Detrick noted the streak is the biggest since June 1997, when the S&P 500 went on to gain 22% in the following 52 weeks. In five of the six winning streaks spanning eight to 12 weeks since 1955, the index delivered double-digit returns in the subsequent year.
Goldman Sachs acknowledged risks including higher energy prices from the Iran conflict, which could weaken consumer spending and pressure profit margins. The bank also noted that the high bar set by recent AI capex and earnings estimate increases creates risk of slowing upward revisions. Still, its base case calls for "positive returns on net through year-end." Yardeni Research's 8,250 target implies roughly 10% upside from current levels, contingent on earnings momentum continuing to outpace price gains.
This article is for informational purposes only and does not constitute investment advice.
