The Bullish AI Trade Receives An Extension

The stock market rally continues, but with little breadth outside of the AI sector.

Key Takeaways

• Q3 Earnings Surging Above Expectations: If there is one underpinning for the stock market rally, it is that the Q3 earnings season is lining up as nothing short of stellar. YoY EPS growth is on pace for +13% and almost 70% of the S&P 500 members that have reported thus far have beaten their sales estimates, the highest share since the fourth quarter of 2021. The magnitude of the beats has been impressive — an average of +2.4 percentage points versus the long-run norm of +0.5%.