The US equities market is supported by strong fundamentals and history, but the current S&P 500 (^SPX) bull run remains in an early stage, ProShares strategist Simeon Hyman said in a Friday research report.

The outlook for the fundamental equity market in 2025 remains strong as tariff worries have faded, although they persist and sit alongside valuation concerns, according to the report.

While the backdrop for equities going into H2 appears positive, there is scope for a prolonged downturn, according to the analyst.

FactSet highlighted that Q2 earnings estimates for all S&P 500 sectors have been revised downwards in the past three months, but 2025 and 2026 earnings are likely to stay positive across the capitalization spectrum, the analyst wrote.

If the growth is realized, it could enable S&P 500 stocks to grow into current valuations that have returned to "slightly frothy levels," per the note.