Wall Street strategists are optimistic about future earnings, projecting 11%-19% year-over-year growth for S&P 500 earnings in 2026. However, there is a divide on valuations, with some arguing that the elevated forward P/E is justified and sustainable for above-average returns, while others see it as a market headwind.

Valuations tend to revert to historical means, but the relationship between forward P/E ratios and stock returns over one year is weak. Schwab analysts emphasize that valuation is a poor market-timing tool, with the stock market often defying expectations. Forward earnings estimates continue to trend higher, influencing stock market performance.

Oppenheimer’s John Stoltzfus predicts a 2025 S&P 500 year-end price target of 8,100, while Fundstrat’s Tom Lee and Goldman Sachs’ Ben Snider offer more modest targets. Industry analysts predict a median S&P 500 closing price of 7,968.78, showing alignment with top-down strategist forecasts. Despite varying outlooks, the market remains influenced by earnings and economic data.

Read more at Yahoo Finance: Wall Street strategists are divided over valuations