Will earnings growth accelerate? Although markets expect an acceleration in earnings growth and a corresponding rise in valuations over the next year, there are risks to this outlook.according to Mike Wilson, chief investment officer and chief US equity strategist at Morgan Stanley.
US stocks in the midst of a bear market rally
“Valuations are now back up to 17.5x earnings, despite the rise in the 10-year Treasury yield. However, for this to make sense, you have to consider that earnings growth will pick up again at the end of this year. Time will tell, but we think S&P 500 earnings growth will slow further rather than react.”
“The bear market rally that started a few weeks ago may continue for a few more weeks until the Fed makes it clear that it remains hawkish and earnings revisions fall into negative territory. That combination should ultimately lead to the S&P 500 towards our target of 3400 in mid to late August.”
Source: Fx Street
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