Markets at a Crossroads: All-Time Highs Clash with Inflation and Yields

The S&P 500 hit new highs on strong CY26 earnings expectations and Fed liquidity, but hotter inflation readings, rising long-term yields, and a downward revision to CY26 EPS growth to about 23.2% raise risk. The piece maintains a neutral stance on SPY, advising caution and selective pruning until inflation pressures ease, highlighting the tension between earnings-driven rally optimism and a backdrop of higher risk-free rates.