The current equity market strength is not confined to just hyperscalers and semiconductors. Positive earnings revisions are now appearing in financials, industrials, and consumer cyclicals, indicating a more sustainable and broad-based rally than many perceive.
Despite a significant repricing of Fed rate expectations and a correction in valuations, equity markets have remained stable. This is because accelerating earnings are potent enough to deliver returns, challenging the notion that markets need dovish monetary policy to advance.
Despite investor fears over geopolitics and inflation, companies are successfully navigating rising costs by passing them on to consumers. Strong revenue surprises show this pricing power is offsetting pressures at an index level, indicating market resilience rather than a widespread demand shock.