What you don’t know

The Dow Industrials are roughly 2% from all-time highs. But the widely followed S&P 500 Index has been setting new all-time highs, as the big technology stocks that dominate the capitalization-weighted index outperformed in the market’s bounce since April.

Some have compared this year’s market to 2000, when a mania in internet and tech stocks imploded, triggering a 31-month bear market that erased 49% of the S&P 500 Index’s value. The index reached an all-time high in March 2000, tumbled more than 11% in less than a month, then rebounded to within 1% of its high in August 2000. At that point, as it became clear that tech earnings were headed lower, the index began a lengthy and brutal decline.

Investors knew tech stocks were expensive in March 2000. They did not know corporate profits were about to fall off a cliff, with official S&P 500 Index earnings in 2001 and 2002 less than half the 2000 level.

Similarly, today’s investors know they are paying up to own shares of fast-growing companies. What they don’t know is whether tariffs, consumer exhaustion, higher borrowing costs, or disappointing returns from artificial-intelligence investments are going to make today’s profit expectations look ridiculous in hindsight.

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