In 2025, the S&P 500 Index (the “Index”) continued its march higher with a third consecutive double-digit return (17.9%) despite a massive correction in early April 2025 when the Index was lower by 15% (April 8, 2025) for the year at one point. The headlines were all about tariffs, Liberation Day, and Artificial Intelligence but the real story was what always drives market returns. Earnings! And earnings for the Index in 2025 are expected to have grown almost 13% for the year after companies report their fourth quarter results later this quarter. More importantly, earnings projections for 2026 are expected to grow over 15% for the Index. Last year’s exceptional returns were the result of this profit growth and continued multiple expansion.

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