Although the S&P 500 hit a record closing high on Thursday, it was only 0.8% above its May 14 closing level. The index has now posted five consecutive trading sessions without a single-day gain or loss exceeding 0.7%, marking its calmest period since February. Wednesday’s intraday range between high and low was the narrowest of the year. Even the catalyst that drove stocks higher on Thursday—a 60-day interim agreement between the United States and Iran to extend the ceasefire and launch further negotiations on Iran’s nuclear program—could keep the market range-bound through the summer, leaving the conflict in a state of limbo.
Although the S&P 500 has returned to its all-time high, the rapid two-month rally has clearly slowed. The benchmark index has surged more than 19% in just 41 trading days since its March low. Analysts at DataTrek Research noted that this gain is approaching the level of “two standard deviations,” a statistically rare occurrence that typically happens only once or twice every 100 trading days. This may suggest that the easiest phase of making money has passed, and investors should prepare for a slower climb or even sideways consolidation in the U.S. market during the summer. Jessica Rabe of DataTrek wrote in a report: “Historical experience suggests that the S&P 500 may consolidate around these levels, and the pace of gains is likely to slow significantly.”
Mark Hackett, Chief Market Strategist at Nationwide, said: “The market is in a rare position where technicals offer modest support, positioning and sentiment are optimistic but not complacent, and fundamentals are at their strongest level in five years without showing signs of overheating. This intersection makes bears hesitate and limits the magnitude and duration of any pullback. In the near term, it’s hard to see any factor breaking this pattern.”
Rabe noted that the S&P 500’s year-to-date gain is only slightly above the upward revision in earnings expectations, with the forward price-to-earnings ratio still constrained around 21 to 22 times. She wrote: “This lack of revaluation is the key question in determining whether U.S. stocks can see another sizable leg higher.” She added that a swift resolution to the Iran war might be what is needed to drive further P/E expansion.
On Tuesday, Goldman Sachs raised its end-2026 target for the S&P 500 from 7,600 to 8,000, citing continued strength in corporate earnings. That target is 6.4% above the index’s previous closing price of 7,519.12. Goldman Sachs said in its report: “All of the S&P 500’s return so far this year has been driven by earnings growth, and we expect this trend to continue in the coming months.” The firm also raised its earnings per share forecasts for the S&P 500: to $340 for 2026, representing a 24% year-over-year increase, and to $385 for 2027, another 13% year-over-year gain.
