What’s Going on With This Stock Market?
Despite geopolitical tensions, high inflation, and low consumer confidence, the stock market has surged, with the S&P 500 rising 29 percent over the past year. This rally is driven by strong corporate profits, especially among major tech firms known as the 'Magnificent Seven.' While investor optimism appears detached from economic reality, it is grounded in robust earnings and expanding profit margins across the corporate sector.
- ▪The S&P 500 has risen 29 percent over the past 12 months and hit an all-time high despite economic and geopolitical turmoil.
- ▪Corporate profit margins are at their highest level in 15 years, with close to 80 percent of S&P 500 companies beating earnings expectations.
- ▪Alphabet, Nvidia, and Meta are among the 'Magnificent Seven' tech companies reporting record profits, with Nvidia nearly doubling its earnings from the previous year.
- ▪When Nike projected declining revenues, its stock dropped more than 15 percent, showing markets still react to earnings performance.
- ▪Investors are betting heavily on AI, but concerns remain about overvaluation if AI fails to generate expected returns.
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EconomyWhat’s Going on With This Stock Market?The boom is not as untethered from reality as it may look.By James SurowieckiIllustration by Matteo Giuseppe Pani / The AtlanticMay 4, 2026, 12:38 PM ET ShareSave The military stalemate between the United States and Iran is crippling the flow of oil around the world. Gas prices are soaring. Inflation is back above 3 percent. Consumer confidence is tanking, and most Americans are pessimistic about the economy. Yet the S&P 500 has risen 29 percent over the past 12 months, and hit an all-time high last week. After a sell-off at the start of the war, stocks are up 13 percent in 30 days. Despite oil blockades and a threat to a whole civilization, investors have shrugged and kept buying.
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