Earnings optimism could constrain the upside for the S&P 500

It is tempting to think there is still significant upside for the S&P 500, given the recent slew of upbeat earnings reports for Q1. Nonetheless, a lot of good news about the outlook for profits is now discounted, even allowing for the effects of the pandemic. And there are clearly risks to the outlook, such as the president’s plan to raise corporate taxes and a potential antitrust drive.

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