london sept 3 reuters  the stock market juggernaut appears unstoppable at first glance but there’s a gnawing concern about continuous profit upgrades just as economists scramble to scale back growth forecasts although the second quarter of 2021 likely marks the peak of the postpandemic bounceback corporate results still managed to wow the gallery annual us earnings almost doubled over the 12 months and european aggregates topped 150 with equity analysts pushing their yearend forecasts up again in the slipstream according to refinitiv data fullyear sp 500 profit growth has been revised up almost 10 percentage points to 458 since july and is almost double the rate forecast in january what’s more net earnings upgrades have continued to stay positive now for 12 months solid with august’s revisions for the sp500 and msci’s allcountry stock index at the highest since may  and the second best in over a decade us european and global stock benchmarks have all powered to new record highs wall st’s sp500 index has now clocked gains of more than 20 so far this year the first time in 24 years it has recorded gains of that magnitude for the first eight months of a calendar year  and only the 6th time in the past 50 years and so despite narratives of speculative price bubbles those gains appear to be driven by bottomup fundamentals and a rosy view of the broadening recovery so much so forward priceearnings valuations have either flatlined or actually fallen through the year although still above longterm averages 12month forward pe ratios for the msci allcountry index are about two points cheaper than the start of 2021 or a year ago the equivalent for the sp is also slightly lower than in january dizzying sectoral country or regional rotations aside broad stock indices measured on that basis appear more comfortable than relentless price gains might suggest the big question is whether the forward earnings euphoria and continuous upgrades are justified some have their doubts “either our models are underestimating the degree of operational leverage left in this cycle or analysts are getting carried away with the latest earnings season and haven’t yet adjusted for the gdp downgrades” said pictet asset management strategist arun sai sai points to surveys showing global growth expectations falling “drastically” since midyear due to china’s slowdown and the spreading delta variant of covid19 and he contrasts that with the rising earnings upgrades over the past 18 months global growth forecasts have tended to drag earnings views higher and their sharp divergence now is eyecatching there’s little doubt the world economy has lost momentum and highfrequency data is now disappointing consensus forecasts worldwide for the first time in over a year citi’s global economic surprise index is at its most negative since june 2020 and all of the us china euro zone and uk subindices are subzero as well major investment firms have moved to slash us 2021 gdp calls citing a more rapid cooling of household consumption and supply bottlenecks hitting manufacturing worldwide china’s pursuit of zero covid amid new variants and regulatory crackdowns has questioned the speed of the recovery too on thursday morgan stanley more than halved its thirdquarter us growth forecast to 29  putting its full year at 57 and below the federal reserve’s forecast for 7 last month goldman sachs cut its q3 gdp forecast to 55 from 90 jpmorgan’s global manufacturing survey index slumped 25 points last month and it said this was only consistent with a mere 2 annualised rate of growth  far below the 6 rate it had bargained for “the loss of momentum in the global goods producing sector at midyear intensified in august” will company analysts and stock markets be forced to recalibrate amundi chief investment officer pascal blanque said he remained neutral overall on equities and cited three “ds” as cause for concern  the delta variant deceleration of economic growth and a divergence in monetary and fiscal policies “the 3ds are building a fertile ground for a return of market volatility acting as a trigger for a pause in the equity rally and for relative value” he told clients many of the incoming gdp forecasts are focussed on the third quarter alone and either see 2022 views unchanged or even lifted as supply problems are expected to dissipate eventually and covid worries ebb further into next year this may explain why 12month forward earnings continue to move higher regardless companies claim they are able to pass on input cost rises to consumers fairly easily and many are still awash with cash after last year’s precautionary borrowing spree so even if the earnings view were tempered increasing buybacks and dividend payouts may justify some further rise in aggregate valuations what’s more if the world growth slowdown or delta variant were to bite harder it may well delay any tapering of monetary support from the fed or other central banks and once again enhance valuations in longduration stocks such as big tech either way this seemingly carefree bull market is causing more headaches than it seems