The S&P 500 Rose 3% in July. The Good Times Should Keep Rolling.

Earnings have also helped the index’s run, largely beating expectations this year and supporting stock prices.

That may not seem obvious looking at second-quarter results, which have been down year over year. The S&P 500, in aggregate, has seen flat sales growth and lower profit margins because of higher costs. But analysts expect sales to grow and margins to expand each quarter for the rest of the year as costs moderate.

That means, if companies can continue to see their financial results hit or exceed expectations, the stock market can chug higher. Analysts are modeling aggregate S&P 500 earnings growth next year, according to FactSet, so as stocks reflect those profits ahead of 2024, they’ll run higher this year.

That is partly why year-end price targets from analysts for every company on the index lands the aggregate—or implied—target level for the S&P 500 at just over 4900, according to DataTrek. That would represent a roughly 7% gain from the index’s current level of about 4590.

Another way DataTrek looked at the market was through a more technical lens. The S&P 500 could end the year near its all-time high, given strong market sentiment and the current economic landscape, the firm’s analysts argued.

The index last traded at its high of 4796 in January 2022, when interest rates were low and the economy and earnings were growing. Now, the market expects rates to either stop rising or fall, while the economy and profits grow. If the index hits the high by the end of the year, it would gain almost 5%.

It might just pay off to buy stocks.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com