Market Moment - May 2026
The first quarter of 2026 was a strong one for corporate earnings, driven by broad-based growth that extends well beyond the technology sector. In this Market Moment update, our Director of Investment Management Anthony Valeri CFA® breaks down the key factors fueling this performance and what it means for the market outlook.
Key takeaways:
- The S&P 500 earnings is on track for 28% growth in Q1 2026, marking one of thestrongest growth rates seen outside of a post-recession rebound.
- This is the sixth consecutive quarter of double-digit earnings growth, with top-line revenue growing an impressive 11%.
- A surge in business investment is a primary driver of growth, as companies building out AI infrastructure are boosting sectors like industrials, materials, utilities, and real estate in addition to technology.
- Despite strong price gains, the technology sector's forward price-to-earnings ratio has declined, making it cheaper than at the start of the year.
- The current market differs from the 2000 dot-com period in several respects, including valuation levels and corporate free cash flow trends.
Bottom line: While stocks may be overbought in the short term, the underlying earnings strength and investment trends suggest a healthy market rather than a speculative bubble.