A recent report revealed that the S&P 500 Index has closed at 42 news highs since July 11, 2016. That’s the day the S&P 500 hit its first all-time closing high in almost 14 months.

A quick review of data from the St. Louis Federal Reserve reveals the index of 500 large companies added five additional closing highs as July came to a close. Low interest rates and a Federal Reserve that is reluctant to aggressively raise interest rates have been a support for the market.

But, we believe the most important long-term driver of stocks remains corporate profits. Note that we said long-term driver. We will experience bumps along the way. For example, we have had four declines in the S&P 500 Index that totaled less than 20% since the bull market began in 2009.

However, the economy did not sink back into a recession, and corporate profit growth continued in a general upward trend, preventing a more serious decline.

As of the end of July, Q2 S&P 500 earnings are forecast to rise a strong 10.8% versus a year ago. While that’s down from a stellar 15.3% in Q1, nevertheless it’s the second double-digit increase in as many quarters. In addition, we’ve been witnessing an uptick in revenue growth, which has been aided by an acceleration in global growth.

Put another way, the fundamentals have been dominating the investment landscape.

Table 1: Key Index Returns

Source: Wall Street Journal, MSCI.com, MarketWatch, Morningstar
MTD returns: June 30, 2017 – July 31, 2017
YTD returns: Dec. 30, 2016 – July 31, 2017
*Annualized, **in U.S. dollars