How resilient profit margins are silencing doubters

Stocks went down last week. The S&P 500, a stock market index, dropped by 1.3% and closed at a number called 4,457.49. So far this year, the index has gone up by 16.1%. It has also increased by 24.6% since it hit a low point on October 12 when it was at 3,577.03. But it’s still 7.1% lower than its highest point on January 3, 2022, when it reached 4,796.56.

Why did the stock market go up recently? Well, one of the reasons is that people expect companies to make more money. And one surprising thing that helped companies make more money is that their profits stayed high even when costs went up.

In 2021, prices for many things went up, and experts thought that this would make it hard for companies to make as much money. But the opposite happened. Companies found ways to make more money by charging higher prices to their customers and by being more efficient in how they work. This made their profits reach really high levels, which was a big surprise. It’s a lesson that reminds us not to underestimate how well companies can do.

Even though some thought high profits wouldn’t last, they did. And after a small drop in recent times, companies continued to make more money in the second quarter of this year.

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