What’s behind the resilience of US equity prices – market structure, earnings expectations or equity risk premia?

Magdalena Grothe, Ana-Simona Manu and Toma Tomov

Economic Bulletin Boxes, 2025, vol. 8

Abstract: This box explores the resilience of US equity markets since 2023 in spite of monetary policy tightening and persistent geopolitical tensions. Market dynamics have been driven by strong earnings growth expectations linked to advances in artificial intelligence, particularly for the so-called Magnificent Seven stocks, and by buoyant risk appetite. Elevated valuations and the significant stock market concentration make the US equity market vulnerable to adverse shocks, such as disappointing earnings or macroeconomic surprises. JEL Classification: G12, G15, E44

Keywords: AI; equity risk premium; US equity prices (search for similar items in EconPapers)
Date: 2025-01
Note: 1601201
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