Indiana Trust Wealth Management
Investment Advisory Services
by Clayton T. Bill, CFA
Vice President, Director of Investment Advisory Services

  • The U.S. equity market, represented by the S&P 500 index, rose 0.6% this week.
  • Earnings expectations for tech firms – and, by extension, the S&P 500 – keep rising, providing a catalyst for the market’s rebound from its March selloff.  

A commonly cited aphorism amongst stock market investors is that the market likes to take the “elevator down” and the “escalator up”. “Crashes” seem to occur overnight, whereas “recoveries” take much longer.

The stock market’s swoon in March and its rebound in April has been the opposite of this received wisdom.  Per Barclays’ Head of Equities Tactical Strategies, Alexander Altmann, the market’s rally over the last month of about 3% per week is in rare historical territory. Market recoveries at that velocity have only happened a handful of times over the last 100 years.

The market is constantly looking ahead. While all the news is about current events, investors are already forming thoughts about corporate earnings for the next few years. On this score, there is a ton of optimism. Analysts at big asset management firms are expecting double-digit earnings growth next year, and those expectations have been rising in recent months. The chart below shows how forward earnings expectations for the S&P 500 in 2026 and 2027 have been steadily revised upward since last fall, with a major acceleration in those upward revisions in recent weeks.


Source: Sam Ro, FactSet, April 2026

What’s driving these rosy expectations? For the US stock market, the health of the tech sector is vital. Investors entered 2026 with some skepticism over earnings growth and, specifically, whether the AI-buildout was over its skis. Whispers of an AI-buildout “bubble” began floating around.

Recently, however, most of the concern about AI is that companies are hitting AI usage limits. There is a general compute shortage hitting the industry. The Wall Street Journal reported last week that Anthropic is hitting a capacity wall and that other players – most notable OpenAI – are strategically positioning themselves as having more availability.

Perhaps the AI datacenter buildout will prove to be excessive. For now, though, the main issue is insufficient compute. Investors are concluding that the buildout will continue to meet AI demand. It is no wonder earnings growth expectations for tech firms – and, by extension, the S&P 500 – keep rising.

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