Can Stock Momentum Hold Up?

The U.S. equity market remains in a structural bull phase despite recent technical volatility and investor caution regarding inflation. Current market conditions are significantly stronger than a year ago, characterized by forward earnings growth approaching 25% and a broadening recovery that extends beyond mega-cap stocks to the median company and small caps. First-quarter earnings have delivered a 10% beat rate—double the long-term average—while capital expenditure is rising by nearly 10% due to AI infrastructure demands and manufacturing reshoring. Although the transition to a new Fed Chair nominee and persistent inflation risks may trigger near-term bond volatility or corrective price action, robust corporate pricing power and sales surprises near 2% suggest the market has already priced in these macroeconomic headwinds. This fundamental strength in earnings and capex guidance supports a continued upward trajectory for equities.