Today's economic indicators were weak, but the stock market rose to yet another new bull market high boosted by better-than-expected earnings from some of the big banks. Also leading the market higher was Microsoft, which rose 4.4% to a new record high. The company introduced Copilot to its suite of Office software. The $30-per-month subscription service adds AI which can design presentations, offer writing prompts, summarize meetings, and rank incoming emails.
In the Brave New World of AI, investors seem to be willing to pay a higher valuation multiple for earnings, especially of the MegaCap-8. Could it be that the historical fair-value P/E of 15.0 is history? It might be in the Roaring 2020s dominated by the MegaCap-8, which currently account for a record 27% of the market cap of the S&P 500 and sport a 31.2 forward P/E (chart). The S&P 500's forward P/E with and without them is 19.2 and 16.7.
The S&P 500 seems to be breaking out of its bull-market channel (chart). That could set the stage for a meltup followed by a nasty pullback perhaps.
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