The third quarter saw more strong gains for US equities. This hot market hasn’t had a pullback of more than 3% since \u201cLiberation Day\u201d back in April. That is a period of time which experienced 28 record highs for S&P 500. During this time, the economic data has proven to be more resilient than expected and the impact of tariffs has been less than anticipated. Earnings for the S&P 500 have also exceeded expectations and most of the stocks that form part of the AI thesis have been red hot.<\/p>\n\n\n\n
In addition to the positive points listed above, the market is drinking the magic elixir that is interest rate cuts. To wit, investors are quite sanguine in their thinking that the economic situation in 2026 will be all roses while inflation remains in check and the Fed cuts rates.<\/p>\n\n\n\n
This is exuberance has left the S&P 500 trading at 23x forward earnings which albeit significantly below the peak achieved during the dot-com era, it is still well above the average of 17x and is cause for concern.<\/p>\n\n\n\n
This doesn’t mean that the bull market move is over. Former Fed Chairman Alan Greenspan questioned in December 1996 whether there was “irrational exuberance” in the stock market. The dot-com bubble didn’t burst until March 2000. We have just entered the 4th<\/sup> quarter of the year which historically is a positive quarter for the market, especially in years when the market is already up YTD. <\/p>\n\n\n\n It is possible that there could be further multiple expansion in this market, especially if the AI narrative remains intact. On the other hand, we can imagine this market being derailed by inflation creeping back above 3% (preventing the Fed from cutting rates), a significant deterioration in the US labor market, or perhaps something as simple as an earnings miss by NVDA.<\/p>\n\n\n\n We tend to think that the above two scenarios are the bookends of our outlook and a more reasonable scenario is that multiple expansion halts and the market becomes solely driven by earnings growth which implies there is still some modest upside left to be had.<\/p>\n\n\n\n Date of report: October 6th 2025<\/sub><\/sub><\/p>\n","protected":false},"author":7,"featured_media":22144,"template":"","categories":[479,666],"class_list":["post-22081","quarterly-report","type-quarterly-report","status-publish","has-post-thumbnail","hentry","category-research-en","category-financial-analysis"],"acf":[],"_links":{"self":[{"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/quarterly-report\/22081","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/quarterly-report"}],"about":[{"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/types\/quarterly-report"}],"author":[{"embeddable":true,"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/users\/7"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/media\/22144"}],"wp:attachment":[{"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/media?parent=22081"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/creandgroup.com\/en\/wp-json\/wp\/v2\/categories?post=22081"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}