Finance·There’s a good reason stocks continue to hit all-time highs—most companies are beating expectations, JPMorgan saysBy Jim EdwardsBy Jim EdwardsExecutive Editor, Global NewsJim EdwardsExecutive Editor, Global NewsJim Edwards is the executive editor for global news at Fortune.
He was previously the editor-in-chief of Insider's news division and the founding editor of Insider UK. His investigative journalism has changed the law in two U.S. federal districts and two states.
The U.S. Supreme Court cited his work on the death penalty in the concurrence to Baze v. Rees, the ruling on whether lethal injection is cruel or unusual.
He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.SEE FULL BIO Stocks are up because earnings are good.LZF via Getty ImagesWhy are stocks hitting record highs?
Because the vast majority of companies are beating earnings and revenue expectations. With inflation contained and a Fed rate cut ly in September, investors remain optimistic.
However, some analysts warn that overvalued stocks may signal a potential market correction. Global mostly rose today, while Bitcoin declined.
S&P 500 futures moved up this morning after the index closed at another all-time high yesterday, hitting 6,445.76. With inflation largely under control, investors appear to be assuming that the U.S.
Federal Reserve will der a 0.25% interest rate cut in September. Some analysts think that if the labor market continues to slow down, the cut might be 0.5%.
Regardless, the hope of incoming cheaper money is good for stocks. Maybe … too good for stocks? Some analysts think the market is heavily overvalued and thus due for a correction.
The S&P’s value is heavily driven by stocks, according to Apollo Management, and on one measure, those stocks are more overvalued today than their equivalents were in the dot-com bubble of the late 1990s.
That bubble burst in 2000, and the index did not regain a new high until 2006. But there’s another reason that traders continue to favor stocks.
The fact is, companies are doing really well, according to JPMorgan.
Seventy-six percent of the companies reporting their Q2 results so far have beaten earnings estimates, and 77% have beaten revenue estimates, according to Dubravko Lakos-Bujas.
Sixty-two percent have been double-beats. Eighty-nine percent of the S&P 500 has reported Q2 earnings so far, and their average revenue growth is 6.1% over the prior year.
Their net income growth is 10.9%, Lakos-Bujas says.
With companies overperforming versus expectations, and a September rate cut looking inevitable, it is not surprising that investors are buying into the action.
Here’s a snapshot of the action prior to the opening bell in New York: S&P 500 futures ticked up 0.2% this morning, premarket, after the index closed up 1.13% yesterday.
STOXX Europe 600 was up 0.49% in early trading. The U.K.’s FTSE 100 was up 0.16% in early trading. Japan’s Nikkei 225 was up 1.3%, another all-time high. China’s CSI 300 was up 0.79%.
The South Korea KOSPI was up 1.08%. India’s Nifty 50 was up 0.69%. Bitcoin declined to $119.9K.Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world.
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