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The S&P 500 (^GSPC) notched five record highs in as many trading days last week, capping off what’s now a 28% rally since reaching this year’s lows on April 8.

This V-shaped recovery in the benchmark index marks the second-fastest rebound from a drawdown of at least 19% in the last 75 years, according to data from Creative Planning’s chief strategist Charlie Bilello.

A massive move in the index from a low of 4,987 to Friday’s closing price of 6,389 has formed a large V shape in the S&P 500 2025 chart.

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And though questions may linger for some as to what, exactly, is driving the market higher, the V-shaped recovery in earnings expectations that has accompanied this rebound in the market makes this rally make a whole lot more sense.

Data from Morgan Stanley’s chief investment officer Mike Wilson shows that earnings revisions breadth — or the ratio of companies raising forecasts to those cutting forecasts — has rebounded as dramatically as, and in lockstep with, the S&P 500 itself.

“Many market participants do not appreciate how strong this very fundamental driver has been over the past several months,” Wilson told Yahoo Finance.

After tanking as analysts assessed the impact of President Trump’s initial “Liberation Day” tariffs, earnings revisions have been soaring.

And early returns this earnings period have backed up this optimism.

With 34% of the S&P 500 having reported results, earnings in the second quarter are on pace to grow 6.4%, up from the 5% expected on June 27, per FactSet data.

Estimates for year-over-year earnings growth in the final two quarters of 2025 and for the full year 2026 have been moving higher. As of July 25, FactSet data showed analysts expect the S&P 500 to grow earnings by 13.9% in 2026, up from the 13.8% that had been expected a month ago.

Wilson notes these revisions lead actual earnings estimates and that the current recovery in the outlook is rivaled only by the pandemic-era rebound. That period, Wilson adds, is “the last time we were so out of consensus on the market.”

The rebound in earnings revisions “helps to not only justify the rally to date, but also why we remain bullish on the next six to 12 months,” Wilson added.

“We are currently experiencing one of the strongest V-shaped recoveries in history, rivaling the COVID rebound in 2020, the last time we were so out of consensus on the market,” Morgan Stanley’s chief investment officer told Yahoo Finance.