The stock market is in full swing at the start of the first quarter profit season.
A formidable concentration has pushed the S&P 500 9.9% this year to 20 record closures, keeping stock valuations at all-time highs. Some investors, however, say the actions may have more leeway to run as the deployment of Covid-19 vaccines and generous government spending strengthen corporate earnings prospects.
The earnings season begins in earnest this week, with results from major U.S. banks, including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., and companies ranging from Delta Air Lines Inc. to PepsiCo Inc. and UnitedHealth Group Inc.
Investors will be watching for signs of confidence from executives that customer demand will continue to rise and that cost increases can be managed to help alleviate concerns that stocks seem expensive.
The S&P 500 traded 22.6 times its projected earnings for the next 12 months on Thursday, above the five-year average of 18.14, according to FactSet. Paying, even for shares of high-quality companies, raises the prospect of off-putting future returns for shareholders.