U.S. — The S&P 500 reached nine record highs in May. The index’s performance was supported by strong corporate earnings and optimistic market forecasts.

Goldman Sachs analysts projected that the S&P 500 could reach 8,000 points by year-end, about 6% higher than its current level. Year to date, the index has risen by 10%, forward earnings per share estimates have increased by 15%, and the price-to-earnings multiple has declined by 4%.

Technology companies reported first-quarter earnings growth of 50% on average, far exceeding the typical 10% for the period. Excluding tech firms, U.S. corporations still posted earnings growth of 20%, double the usual rate. Businesses are also benefiting from lower tax rates and other provisions in the tax and spending bill passed last year.

"I've been doing this for 25 years, and I've never seen anything like this — it's really amazing how big these earnings numbers are," Jeff Buchbinder, chief equity strategist at LPL Financial, said. "If you're in a market environment where you have potentially falling interest rates, lower oil prices, no recession and above-average earnings growth, that is the recipe for above-average stock market gains," Buchbinder said.

Anthony Saglimbene, chief market strategist at Ameriprise, offered a more cautious outlook. "Higher bond yields and sticky inflation are growing concerns that may cap upside if these conditions persist." "In our view, the direction of the market's travel from here could hinge on whether rates stabilize and whether incoming economic data confirms that growth can hold without reigniting inflation," Saglimbene added.

Investors are watching risks that could disrupt the rally, including the possibility that the Iran conflict continues, which would likely push energy prices higher. Comparisons have been made between the surge in AI-related stocks and the dot-com boom of the late 1990s. AI companies failing to meet lofty earnings expectations also poses a potential threat to market gains.