Do you think the stock market rally is over? Maybe it’s just beginning

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The stock market rally has already defied expectations this year, ignoring geopolitical conflicts, economic uncertainty and global trade tensions to reach new records. Some analysts say the recovery may only just be beginning.

The Dow Jones closed above 47,000 points for the first time Friday, supported by cooler weather than expected inflation data which supported hopes for interest rate cuts from the Federal Reserve.

The S&P 500 is up 36% in just over six months, boosted by strong corporate earnings and optimism about Fed rate cuts. Enthusiasm for artificial intelligence has been fueled bubble problems but also contributed to the rise of the market.

“Absent any truly surprising and adverse events, the current stock market momentum is likely to persist through the end of the year,” Emily Bowersock Hill, CEO of Bowersock Capital Partners, said in an email.

Stocks are historically expensive and trade tensions between the United States and China persist. Although there is no shortage of concerns, the outlook remains positive for stocks, according to analysts.

The bottom line: corporate profits continue to impress Wall Street and the Fed are expected to lower interest rates, which would pave the way for a recovery.

The companies are expected to deliver strong results this quarter, driven by “above-trend growth” from AI companies, AI-related investments and a resilient consumer, JPMorgan Chase analysts said in an Oct. 21 note.

About 86% of S&P 500 companies that have already reported third-quarter earnings reported results that beat expectations, according to FactSet.

The S&P 500 had a historically strong September and is on track for its sixth straight month of gains. But even this extraordinary growth does not rule out further gains, investors say.

Fear of missing the rally, or FOMO, also keeps stocks afloat, according to Sam Stovall, chief investment strategist at CFRA Research.

“With the Fed likely to cut rates two more times this year and with AI collaborations continuing, I think right now we’re trading on the fumes of FOMO,” Stovall said.

“We run on adrenaline,” he said. “Valuations are still tight, but at least in the short term, things still look good. »

Of course, not everything is positive.

This is a “high-risk bull market,” according to Bob Doll, CEO of Crossmark Global Investments.

The labor market showed signs of weakening in recent months. Even though consumer spending has held up so far, Doll said he remains concerned about a slowdown in spending — and a decline in corporate profits — if the weak labor market persists.

Wall Street will also question whether big tech companies can continue to impress with their profits. The Magnificent Seven group of technology stocks has accounted for about 41% of the S&P 500’s gains this year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Meta (META), Microsoft (MSFT) and the alphabet (GOOG) are expected to release their results after the closing bell on Wednesday. Apple (AAPL) and Amazon (AMZN) are expected to release their results on Thursday. NVIDIA (NVDA), the star of the show AI, publishes his results on November 19.

Tesla (TSLA) reported earnings on October 22, and its earnings fell short of analyst estimates. Tesla shares are down about 1% since reporting earnings.

“While the bullish case is potentially powerful, we are not convinced that the rising tide will sufficiently lift all boats in terms of a surprise earnings surge,” Lisa Shalett, CIO at Morgan Stanley Wealth Management, said in a note.

The stock market has been more resilient this year than many on Wall Street expected.

President Donald Trump’s tariff campaign has sparked concerns about slowing economic growth and a resurgence in inflation, but investors have tried to look past their worries and focus on corporate profits.

At the same time, inflation data has so far been more subdued than expected. As the economy shows signs of strain, as Borrowers are falling behind on their car paymentsthe stock market pushed higher.

“Next year will bring new challenges, but we do not advise you to derail the upward trend between now and the end of the year,” Chris Zaccarelli, CIO at Northlight Asset Management, said in an email.

This month the Dow Jones fell 900 points on October 10 after President Donald Trump threatened new tariffs on China before recouping those losses and closing at a record high two weeks later.

Trump and Chinese leader Xi Jinping are expected to meet this week at the Asia-Pacific Economic Cooperation summit in South Korea. Tensions have flared since Beijing announced new export controls on rare earths on October 9 and Trump threatened new 100% tariffs the next day, set to take effect on November 1.

If there were to be a further escalation in trade tensions between the United States and China, this could be another opportunity to buy the dip, according to Keith Lerner, chief market strategist at Truist.

“If something all of a sudden becomes more tense and both sides get bogged down, and that’s kind of a short-term risk,” Lerner said, “we would look at that risk if that were to happen.”