S&P 500 Record Profits Warned as Double-Edged Sword, Risking 1.8% Decade Returns

Mark Hulbert cautions that S&P 500's Q1 net profit margin of 13.4%—far above the 6.3% historical average—could mean-revert, projecting just 1.8% annualized real returns over the next decade amid unchanged P/E and GDP growth. This bearish note follows a stellar earnings week for industrials on May 4, where 29 of 32 S&P 500 companies beat EPS estimates, powering XLI's 12.42% YTD gain versus the index's 5.31%. SPX Technologies led with Q3 adjusted EPS up 32% to $1.84, 23% revenue growth to $616M, raised full-year EPS guidance to $6.65–$6.80, and $1.6B liquidity for M&A.