The US stock market continues to show resilience as the S&P 500 index has surged 20% year-to-date and is nearing record highs. This optimism is fueled by recent labor market data, which significantly exceeded expectations, reinforcing the case for robust economic growth.
As the corporate earnings season commences, investors are keenly awaiting results that will justify the high valuations. Currently, the S&P 500 is trading at 21.5 times future earnings estimates, a level not seen in three years and well above its long-term average of 15.7. Analysts suggest that strong profit growth will be crucial for sustaining these valuations.
UBS equity strategists predict a 4.7% increase in S&P 500 earnings for the third quarter compared to the previous year. However, when accounting for historical positive earnings surprises, this figure could rise to 8.5%. The market's expectations hinge on companies delivering better-than-anticipated earnings to maintain investor confidence.
In India, Tata Steel reported a 5% year-on-year increase in crude steel production for Q2 FY25, reaching 5.27 million tons. The company also saw a significant surge in net profit, up 51.37% to Rs 959.61 crore compared to the same quarter last year. This growth reflects the company's strategic initiatives and strong performance across various segments.
As economic indicators unfold, including upcoming consumer price data, market participants are closely monitoring trends that could influence Federal Reserve rate decisions, further impacting stock market dynamics.