Wall St. Pessimists Are Getting Used to Being Wrong

Beaten as they might be by the stock market’s rally, worriers on Wall Street still question how long it can last. Their numbers are shrinking, though.

After starting the year with dour warnings about the economy, many investors and analysts have changed their minds. This newfound bullishness is grounded in signs that inflation is slowing and the economy is still standing strong, as well as a belief that corporate profits are set to grow now that interest rates have reached their peak, or are at least very close to it.

The past week gave them little reason to revert to more gloomy opinions.

Marquee earnings from some large tech companies, like Meta and Alphabet, helped drive stock prices higher. Consumer-facing companies like Coca-Cola and Unilever that are dependent on households continuing to spend also posted bumper financial results. Even the Federal Reserve chair, Jerome H. Powell, said on Wednesday that the central bank’s own researchers no longer expected a recession this year.

With that upbeat backdrop, the S&P 500 has climbed more than 19 percent since the start of the year. The benchmark sits less than 5 percent from the record it reached in January 2022.

In other words, it’s been a difficult time to be bearish.

“We were wrong,” Mike Wilson of Morgan Stanley, one of the most pessimistic analysts on Wall Street at the start of the year, wrote in a note to clients this week.

But that doesn’t mean Mr. Wilson thinks the future will be as rosy as many investors do. He is still predicting that the S&P 500 will end the year more than 15 percent below where it is today, and he is not alone.