Can markets suffer from too much of a good thing?

The market is probing the zone where the prevailing positives driving stocks higher could cross the line into too much of a good thing. This is not about the pace of index gains, the S & P 500's near-20% run off the March 30 low or the nine straight winning weeks. It's more a matter of the genuinely supportive fundamental, technical and macro drivers around earnings growth, semiconductor leadership and generous credit conditions that could soon overshoot in a way that drags on returns from here. Corporate profits Bullish strategists are correct in pointing out that the S & P 500's advance has been substantiated by a stupendous acceleration in reported earnings. Largely (but not entirely) due to the historic level of spending on AI infrastructure and massive uptake of cloud services, S & P 500 earnings this year are now projected to rise by more than 22%, up from 17% on March 31. Such a pace of profit acceleration is genuinely rare outside of periods when companies are emerging from recessions or other macro shocks. True, some if the upside surprise has come from non-operating gains on holdings in huge, private AI pioneers, but not all of it. This earnings surge has enabled the index to rise 10% since its former peak on Oct. 29 while compressing its forward price/earnings multiple to 21.4 from above 23 six months ago. "Stocks follow earnings" is one of the most wholesome and reassuring maxims in the investor phrasebook. …