Stocks hit record highs as 76% of firms beat earnings expectations and Fed easing looms

Stocks are continuing to push higher, driven by strong corporate performance and expectations of monetary easing, according to JPMorgan. A significant number of companies have outperformed both earnings and revenue forecasts, reinforcing investor optimism and supporting equity valuations [1]. Dubravko Lakos-Bujas, a senior analyst at the firm, noted that 76% of companies reporting Q2 results have exceeded earnings estimates, while 77% have surpassed revenue expectations. Additionally, 62% of firms have achieved "double-beats" by outperforming both metrics [1].

The S&P 500 has recently closed at another record high, with futures continuing to reflect bullish sentiment ahead of the next trading session. As of the latest report, 89% of S&P 500 companies have reported Q2 earnings, with revenue growth averaging 6.1% year-over-year and net income growth at 10.9% [1]. These figures underscore a broad-based trend of outperformance and suggest that corporate America is navigating current economic conditions with relative ease.

Investors are also factoring in the likelihood of a Federal Reserve rate cut in September, which has contributed to a favorable market environment. While the timing of the cut remains uncertain, with some analysts speculating that a larger 0.5% cut may be necessary if the labor market continues to weaken, the expectation of cheaper money is already being priced into financial assets [1]. This has helped maintain upward momentum across global markets, with regional benchmarks such as the STOXX Europe 600, Nikkei 225, and KOSPI all posting gains [1].

However, concerns about overvaluation persist, particularly in the technology sector. According to Apollo Management, tech stocks—largely driving the S&P 500’s performance—are currently more overvalued than their counterparts were at the peak of the dot-com bubble in the late 1990s [1]. While the market has not yet shown signs of a correction, analysts have warned that such overvaluation could lead to volatility in the future.

Despite these concerns, fund managers remain bullish on equities, with many maintaining overweight positions in global stocks. This confidence appears to be rooted in the continued strength of earnings and revenue, which are seen as more immediate indicators of corporate health than valuation metrics [1]. As companies continue to deliver results that beat expectations and the market anticipates further monetary easing, the current rally shows no signs of slowing—though caution is warranted given the historical precedent of overvaluation leading to market corrections [1].

Source: [1] Fortune – https://fortune.com/2025/08/13/theres-a-good-reason-stocks-continue-to-hit-all-time-highs-most-companies-are-beating-expectations-jpmorgan-says/