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The S&P 500 (^GSPC) notched 5 document highs in as many buying and selling days final week, capping off what’s now a 28% rally since reaching this yr’s lows on April 8.
This V-shaped restoration within the benchmark index marks the second-fastest rebound from a drawdown of not less than 19% within the final 75 years, in line with information from Inventive Planning’s chief strategist Charlie Bilello.
An enormous transfer within the index from a low of 4,987 to Friday’s closing worth of 6,389 has fashioned a big V form within the S&P 500 2025 chart.
And although questions might linger for some as to what, precisely, is driving the market increased, the V-shaped restoration in earnings expectations that has accompanied this rebound out there makes this rally make an entire lot extra sense.
Information from Morgan Stanley’s chief funding officer Mike Wilson reveals that earnings revisions breadth — or the ratio of firms elevating forecasts to these reducing forecasts — has rebounded as dramatically as, and in lockstep with, the S&P 500 itself.
“Many market participants do not appreciate how strong this very fundamental driver has been over the past several months,” Wilson informed Yahoo Finance.
After tanking as analysts assessed the influence of President Trump’s preliminary “Liberation Day” tariffs, earnings revisions have been hovering.
And early returns this earnings interval have backed up this optimism.
With 34% of the S&P 500 having reported outcomes, earnings within the second quarter are on tempo to develop 6.4%, up from the 5% anticipated on June 27, per FactSet information.
Estimates for year-over-year earnings development within the last two quarters of 2025 and for the complete yr 2026 have been transferring increased. As of July 25, FactSet information confirmed analysts anticipate the S&P 500 to develop earnings by 13.9% in 2026, up from the 13.8% that had been anticipated a month in the past.
Wilson notes these revisions lead precise earnings estimates and that the present restoration within the outlook is rivaled solely by the pandemic-era rebound. That interval, Wilson provides, is “the last time we were so out of consensus on the market.”
The rebound in earnings revisions “helps to not only justify the rally to date, but also why we remain bullish on the next six to 12 months,” Wilson added.
“We are currently experiencing one of the strongest V-shaped recoveries in history, rivaling the COVID rebound in 2020, the last time we were so out of consensus on the market,” Morgan Stanley’s chief funding officer informed Yahoo Finance.
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