“With Earnings Season Underway, What Lies Ahead for the Stock Market?”
As the stock market continues to hover near all-time highs, investors are eagerly anticipating the start of the earnings season. With the US presidential race and Federal Reserve's next moves also in focus, there is a sense of uncertainty mixed with cautious optimism in the air.
The S&P 500 is on the verge of achieving its 35th record this year, reflecting a strong underlying market sentiment. Despite this, US consumers' near-term inflation expectations have fallen, according to a Fed Bank of New York survey. This mixed picture sets the stage for a potentially volatile earnings season.
Analysts are optimistic about the earnings outlook, with upgrades to profit estimates outnumbering downgrades. John Stoltzfus at Oppenheimer Asset Management raised his year-end S&P 500 target to 5,900, citing a robust earnings outlook and a resilient economy as key drivers. However, Scott Rubner at Goldman Sachs Group warns that the bar for corporate results is high, with lofty expectations already factored in.
While there may be some “choppiness” in the market during earnings season, Mark Hackett at Nationwide believes that once companies resume buybacks, the market is likely to climb back up. With Treasury 10-year yields remaining stable and Bitcoin facing selling pressure, investors are closely monitoring economic indicators for clues about future market movements.
The lack of a clear winner in the French elections and President Joe Biden's pledge to continue his presidential race add further layers of complexity to the market dynamics. Traders are cautioned by Morgan Stanley's Mike Wilson to brace for a potential correction as uncertainties around corporate earnings, Fed policy, and the US presidential campaign unfold.
Amidst all this, corporate highlights from Exxon Mobil, Southwest Airlines, Airbus, Eli Lilly, and other major players offer insight into the broader economic landscape. As the Fed chair prepares for his semiannual testimony and key economic data releases loom, the next few weeks promise to be a crucial period for the stock market.
So, as we navigate through the twists and turns of earnings season, political developments, and economic data, one thing remains clear: the stock market is in for a bumpy ride, but opportunities for growth and profit abound for the savvy investor. Stay tuned for more updates as the market continues to evolve in the coming weeks.