Corporate profits have proved more resilient than feared, both because giant, secular-growth companies account for an outsize portion of S&P 500 earning power and because there has been no painful reckoning of massive bankruptcies. Leuthold Group’s Jim Paulsen shows the apparent low point in S&P 500 profit margins this year is vastly higher than the troughs of prior recessions. In bull markets strength begets strength — up to a point. The S&P 500 is more extended further above its 200-day average than at any time but one in the past decade. Offsetting some of this aggressiveness are still-muted fund flows and the fact that Wall Street strategists’ average year-end S&P 500 price target is around 3,200, more than 8 percent below where it closed Friday, hardly a sign that speculative froth is pervasive.

Source: The Standard August 30, 2020 05:48 UTC