S&P 500 posts 27.1% Q1 earnings growth led by AI, but inflation and economic risks loom.

The S&P 500 reported a strong 27.1% year-over-year earnings growth in Q1, driven primarily by advances in artificial intelligence and resilient consumer spending. Despite reaching record highs, concerns persist due to rising inflation, higher oil prices, and weakening economic data outside AI sectors. Real income growth is expected to decline as inflation outpaces wages, which could dampen consumer spending and economic growth in the near future. The market appears overbought amid these macroeconomic challenges, prompting cautious optimism and a preference for a potential market pullback to consolidate gains.