Why Do Stocks Keep Rising and What Should You Be Concerned With Right Now?

By John Lau, CPA, CFP®

June 1, 2026 – I get this question almost every week now.

The market has had a tremendous run, yet if you turn on the news, you’d think investors should be worried about inflation, interest rates, government deficits, tariffs, wars, or the next economic slowdown. With all that uncertainty, many people naturally wonder: Why do stocks keep going up?

The answer, at least right now, is earnings.

At the end of the day, stocks are ownership interests in businesses. If those businesses keep making more money, their stock prices will generally follow.

We’ve seen that again over the past few weeks. Companies like Dell and Snowflake reported strong results and were rewarded immediately by investors. The same story can be seen throughout much of the technology sector.

One company that really illustrates the point is Micron Technology. The stock has more than doubled in a relatively short period of time. Normally, when a stock rises that much, investors start talking about bubbles and excessive valuations.

What’s interesting about Micron is that even after such a large move, the valuation still isn’t particularly stretched. Why? Because earnings expectations have been rising almost as fast as the stock price itself.

That’s an important distinction.

Markets can rise because investors become overly optimistic. Those rallies tend not to last.

Markets can also rise because companies are genuinely making more money. Those rallies tend to have a much stronger foundation.

Today, we’re seeing more of the latter.

Of course, that doesn’t mean there aren’t risks.

A lot of the earnings growth we’re seeing is tied directly to the enormous amount of money being invested in artificial intelligence infrastructure and data centers. Companies are spending billions of dollars building the technology needed to support the next generation of AI applications.

As long as that spending continues, earnings can continue growing.

But if companies begin to pull back, delay projects, or question whether they’re getting enough return on those investments, expectations could change quickly. And when expectations change, stock prices often react much faster than earnings do.

That’s why I continue to pay close attention to earnings reports. They tell us whether the story is still intact.

What concerns me most, however, isn’t necessarily the possibility of weaker earnings.

It’s investor behavior.

Whenever a particular part of the market performs exceptionally well, investors naturally begin to crowd into it. That’s human nature. We all tend to want more of what’s working.

Today, many portfolios are becoming increasingly concentrated in a relatively small group of technology companies because that’s where much of the growth has been.

The challenge is that market leadership never stays the same forever.

I’ve been doing this long enough to remember when international stocks led the market. I’ve seen periods when value stocks outperformed growth stocks, when small companies outperformed large companies, and even periods when bonds outperformed stocks.

Every market cycle eventually produces a new leader.

The biggest mistake investors make is assuming that whatever worked best during the last five years will automatically work best during the next five years.

That’s why I continue to believe diversification matters, even when it feels boring.

The goal isn’t to own less of the winners. The goal is to avoid becoming so dependent on one theme, one sector, or one story that your entire financial future depends on it continuing indefinitely.

For retirees, this is especially important.

When you’re accumulating wealth, you can often recover from mistakes with time. In retirement, the stakes are different. The objective isn’t simply to maximize returns. The objective is to create a portfolio that can support your lifestyle through good markets and bad ones.

That’s why I spend far more time thinking about risk management, income planning, taxes, and diversification than trying to predict where the S&P 500 will be six months from now.

The market may continue higher. In fact, if earnings keep surprising to the upside, it probably will.

But history teaches us that markets don’t move in straight lines forever.

The investors who tend to be most successful aren’t the ones who correctly predict every twist and turn. They’re the ones who stay disciplined, remain diversified, and avoid becoming overly dependent on whatever happens to be the hottest investment story of the moment.

That’s a lesson worth remembering, regardless of where the market goes next.

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