The earnings season is about to kick off. Can the US stock market hit new highs again?

According to the financial news app Smart Finance, some Wall Street strategists believe that US companies need to achieve a big harvest in the upcoming earnings season for the US stock market to continue its record-breaking rally. An index from Citigroup shows that after entering the second quarter earnings season, analysts have raised profit expectations more than they have lowered them. At the same time, data compiled by Bloomberg shows that expectations for forward 12-month returns have reached historic highs. Scott Chronert, a strategist at Citigroup, wrote in a report: "Given the high implied growth expectations, the market may need to see earnings growth combined with robust execution drivers to sustain the recent rally or push it to higher levels." Concerningly, while the fundamental trends are positive and consensus expectations can be met, valuations indicate that buyers will demand more. On July 12, Morgan Stanley will release its second-quarter earnings report. Prior to this, the S&P 500 index has rebounded by about 35% since its low point in October last year, hitting over 30 new all-time highs this year driven by the artificial intelligence boom and bets on Fed rate cuts. However, this has made valuations more expensive, with the benchmark index's price-to-earnings ratio approaching 22, compared to a long-term average P/E ratio of 16. Investors' reactions to first-quarter earnings were also relatively muted. According to Bloomberg data, over 80% of S&P 500 companies exceeded earnings expectations, but the median stock underperformed the index by 12% on the day of earnings announcement. Goldman Sachs strategist David Kostin said in a recent report that this trend may repeat in the second quarter. His team estimates that profit growth expectations have reached the highest level in nearly three years, and investor sentiment is also high. Kostin said: "Therefore, although not as extreme as the first quarter, the rate of outperformance this quarter should also be below average." However, John Stoltzfus, a strategist at Oppenheimer Asset Management, stated that strong profit prospects and a resilient economy could support higher valuations. Stoltzfus has raised his year-end target for the S&P 500 index to 5900 points, ranking second among strategists tracked by Bloomberg. His forecast implies a further 6% increase from the current level