S&P 500, you look stunning in green, and we’re sure the rest of the world would agree with us. The US stock market notched its best start to the year since 2019, driven by robust earnings and AI momentum, propelling the S&P 500 to 5,255 — a strong 10.2% jump.

Better than ever: The benchmark index set 22 record highs in the first quarter and has risen for five consecutive months, handily surpassing Wall Street’s year-end median forecast of 5,100 set just three months ago.

• Per NYT, 40% of S&P 500 stocks are trading higher than a year ago — with 10 out of 11 of the index’s sectors in the green.
• However, despite AppleAAPL
  and TeslaTSLA
  tanking, the Magnificent Seven still drove the majority of the gains, accounting for 40% of the S&P 500’s headways this year.

Forecast fatigue

Based on FactSet data, the S&P 500’s price target is 5,614 over the next 12 months — a 7.1% premium to Monday’s price. However, with the index trading almost 3% above its year-end target, analysts are scrambling to update their own forecasts, which are growing further apart. Goldman Sachs suggests the S&P could rally to 6K or dip to 4.5K, while JPMorgan Chase warns stocks could “crack at any time.” But what do our readers think?

• Our recent bear or bull survey reveals that 65.6% of readers feel bullish for April 2024 — virtually unchanged from March but above the past 12-month average.
• Meanwhile, Bank of America’s Fund Manager Survey shows investors are turning away from US tech and consumer discretionary stocks in favor of cheaper overseas options.

Only earnings season can tell: While analysts remain bullish on stocks, the S&P 500’s trailing and forward 12-month price-to-earnings ratio is now almost 20% higher than its average level over the past decade. Whether stocks live up to these higher valuations will ultimately hinge on the results of the coming earnings season, which kicks off next week. There’s a lot at stake with US stocks near all-time highs — and the next market direction will depend on earnings performance.