Why the bull market could run through 2026

Core Viewpoint - The market is expected to resume a rally mode, with an increased S&P 500 target of 7050 by year-end, implying a 3-4% rally from current levels [2][3]. Earnings Growth - Earnings are projected to grow by 13-14% over the next year, which is a significant driver for market performance [4]. - Tech companies are experiencing year-over-year growth rates of approximately 27-28%, while financials are seeing around 23-24% growth, largely due to increased M&A activity [5][6]. - Traditional cyclical sectors like industrials and energy are lagging, with growth rates between 2-4% [6]. Earnings Surprises - Companies are beating earnings expectations by an average of 9%, which is notably higher than the typical 4-5% beat [7][8]. - Revenue growth is also strong, with a 2% beat on top-line figures, indicating robust performance across sectors [8][9]. Market Valuation - The overall market's perceived high valuation is attributed to the growth of tech stocks rather than an increase in individual company valuations [10][11]. - Large-cap tech companies have lower PE multiples today compared to two years ago, contradicting the narrative of inflated valuations [12]. Investment Strategy - There is a suggestion to overweight sectors with stronger earnings growth rather than buying the entire S&P 500 [13][14]. - The tech sector, particularly, is highlighted as a key area for investment due to its exceptional performance compared to non-tech sectors [15]. Future Outlook - The current market dynamics are expected to continue, with no immediate signs of a downturn in earnings or growth [16]. - Potential risks include economic slowdowns or changes in employment rates, but these are not seen as imminent threats [17][19].