Behind Roaring Stocks Are Profit Upgrades of Unprecedented Size

The rally in the equity market is running hot by almost every standard, from sentiment to momentum signals. Yet anyone worrying about a meltdown can take comfort in an equally strong trend in corporate earnings.

Thanks to the tax cut passed into law in December, analysts have been raising their estimates at a rate not seen in at least six years. Forecasts for 2018 profit from companies in the S&P 500 Index increased 3.5 percent over the past four weeks to $151 a share, the fastest pace over comparable periods in Bloomberg data that go back to 2012.