Optimism on the Trading Floor Despite Uncertainties: Why Analysts Are Holding on to the Stock Markets

While discussions about a possible AI bubble and the associated high valuations continue, analysts are finding more and more reasons for a positive outlook—not just for the next quarter. However, the economic framework remains dynamic: the effects of tariffs continue to unfold, and the recent actions of the Fed have introduced additional risks and uncertainties. Central banks are not only under the pressure of rising prices but also face the real prospect of growing unemployment and interventions in their independence. Market optimism is based not only on the strong corporate figures expected for the rest of the year. The projected returns for 2026 and 2027 are also driving the positive sentiment, supported by efficiency gains from the use of artificial intelligence and a more restrained monetary policy by the Fed. According to an analysis by DataTrek co-founder Nicholas Colas, the S&P 500 is trading at a level reminiscent of the dotcom era, with a price-to-earnings ratio of 40 based on the earnings of the last ten years. For the S&P 500, maintaining its earnings forecasts remains crucial. This means it would need to grow by 13.4% next year and a further 15% by 2027. Trust is a decisive factor here, and despite economic upheavals, companies have so far been skilled at maintaining their profit margins. While margin expansion has been particularly evident in the big-tech sector this year, it is expected to extend to other industries by 2026. The challenge lies in finding the right balance in the labor market, as a robust labor market could force the Fed to keep its interest rate policy stable. The disagreements within the Fed over priority setting make this a complex issue. Ultimately, this development will significantly influence corporate spending and thus also stock prices.