S&P 500 Rally Faces Pullback as Record Earnings Season Winds Down, Strategists Warn

In late May 2026, Wall Street strategists cautioned that U.S. stocks could encounter a pullback as the strongest post-pandemic earnings season concludes, removing a key catalyst that propelled the S&P 500 to record highs despite rising geopolitical and interest rate risks. Scott Rubner, equity strategy chief at Citadel Securities, said the risk-reward asymmetry has declined after a 17% rebound from 2026 lows, making a near-term retrenchment more likely once corporate reports fade. With over 90% of S&P 500 companies reporting, first-quarter earnings per share surged 25.1% year-over-year, far exceeding the 13% growth expected at the quarter's start. The beat rate of 84% is the highest since Q4 2021, driven in part by AI-related demand, Siebert Financial Chief Investment Officer Mark Malek noted. However, strategists warn that the absence of fresh profit updates could shift investor focus to Federal Reserve policy and Middle East tensions, potentially triggering a test period for equities. Nancy Tengler of Laffer Tengler Investments said any pullback would likely be a buying opportunity, citing sustainable profit growth fueled by AI spending and strong buyback activity. Historical patterns suggest a possible correction in Q3 2026 before a year-end rebound, she added.