The longest in five years! The wave of upward revisions in U.S. stock earnings has set a record since 2021, which may signify another bountiful reporting season ahead.

Supported by a solid outlook for corporate profits, the U.S. stock market is withstanding the pressures of rising inflation, demonstrating strong resilience. An index from Citigroup shows that over the past 21 weeks, the number of analysts raising their earnings expectations for U.S. companies has consistently outnumbered those downgrading them, marking the longest consecutive period of upward revisions since September 2021. This trend paves the way for another impressive earnings season for U.S. companies, following a recent quarter that was one of the strongest on record. Meanwhile, with WTI crude oil prices holding steady above $90 per barrel and traders widely expecting the Federal Reserve may raise interest rates next week, the momentum of earnings upgrades has effectively boosted market sentiment. Although the rally in U.S. stocks has slowed in the past month, the S&P 500 index remains only about 1% below its historical high. Marija Veitmane, head of equity research at State Street Global Markets, stated, "What drives the stock market is micro fundamentals, not macro factors. I continue to see strong earnings revisions boosting investors' interest in stocks; I don't see this as frenzy or a 'whistling past the graveyard' kind of behavior." Keith Parker, head of global macro equity strategy at UBS, pointed out that the market's expectations for S&P 500 earnings next year have been raised by nearly 4% in just the past two months. "This is extremely rare and fully reflects the broad robustness of recent U.S. corporate earnings across multiple sectors." Recently, the bond market has once again become a core variable influencing the direction of the stock market. Usually, rising yields increase financing costs and depress the present value of future earnings, thus putting pressure on the stock market. However, this rise in yields has been accompanied by a simultaneous strengthening of economic growth expectations, indicating that the stock market is capable of absorbing the impacts of higher interest rates. Some market participants are further optimistic about the upside potential brought by the AI boom. For example, Willem Sels, Chief Investment Officer at HSBC Private Banking, noted that current U.S. stock valuations have not yet fully reflected the potential scale of productivity improvements driven by AI.