Capital Economics expects the S&P 500 to push higher in the coming weeks—propelled by the “One Big Beautiful Bill” and manageable Treasury yields—while warning that tariff shocks and fading AI enthusiasm could temper returns longer term.

Near‑Term Drivers

• Fiscal Boost
  The new $3.3 trillion package extends tax cuts and raises the debt ceiling by $5 trillion, removing the specter of a Treasury showdown and underpinning both growth and sentiment.

• Stabilized Yields
  Recent long‑term Treasury yield rises aren't steep enough to compress the equity risk premium dramatically. Even a 20 bp lift in yields leaves risk premia above levels seen before the dot‑com bust.

• AI Enthusiasm
  Renewed interest in artificial intelligence could further shrink the equity risk premium, driving multiple expansion even if earnings growth stays modest.

Long‑Run Risks

1. Tariff Surprises
   Any new levies could dent corporate margins and consumer spending—stalling the near‑term uptrend.

2. Earnings Season
   Analysts have held 2025 earnings estimates flat since May, but a string of misses could force downward revisions.

3. AI Fatigue
   Capital Economics cautions that AI's “wow” factor may fade, reversing part of the premium investors have paid for growth.

Actionable Insights

• Automate Key Release Tracking
  Never miss Fed minutes, GDP prints or debt‑ceiling updates—use the Economics Calendar API to schedule alerts on every major U.S. macro release.

• Monitor Valuation Shifts
  Track sector‑level P/E ratios to spot early signs of multiple compression or expansion after fiscal news—pull daily data via the Sector P/E Ratio API.

• Gauge Risk Premium
  Compare current S&P 500 forward P/E to historical averages; when the spread narrows below your threshold, consider trimming exposure to cyclical sectors.

Conclusion
With fiscal tailwinds and manageable rate risks, the S&P 500 can grind higher near term—but keep an eye on tariffs, earnings and AI sustainability. Use Financial Modeling Prep's API to power your real‑time market monitoring.