Is the party over?

It may surprise you to learn that a slowdown in the growth rate of corporate earnings doesn’t necessarily mean the party’s over for stocks. Not only are earnings slowdowns natural at this time in the economic cycle, but history has shown the market actually has performed best during such periods.

That’s because the stock market looks ahead. Once investors believe the Fed is done raising rates, price/earnings (P/E) ratios tend to expand—unless they are already unrealistically high, which they’re not now.

That positive story, combined with low core inflation, could yet provide the fuel for another leg up in the market. In such late-cycle rallies, history also suggests that growth and large-cap stocks tend to be market stars.