“Solid U.S. economic growth and Federal Reserve interest rate cuts have boosted corporate earnings and profit margins, lifting U.S. stocks and strengthening our overweight position. We believe this will continue to feed into fourth-quarter earnings results starting this week,” said strategists at the BlackRock Investment Institute.
The profit gap between the ‘Magnificent Seven’ tech giants and the rest of the market is expected to continue to narrow, she added.
“In recent years, technology has been a big part of earnings growth, but value stocks should deliver pretty solid earnings. Industrials, financials and other cyclical value names could very well see improving earnings growth that justifies economic growth,” said Ryan Detrick, chief market strategist at Carson Group.
Earnings season officially kicked off Tuesday, when JPMorgan Chase beat analysts’ expectations for fourth-quarter earnings.
“We see 9 of 11 sectors showing positive growth in the fourth quarter, up from 6 in the third quarter and two in the second quarter,” Deutsche Bank analysts wrote in a note, pointing to broader earnings growth across all S&P 500 companies.
On the other hand, sectors that cater to cost-sensitive buyers could come under renewed pressure as value-conscious shoppers tighten their belts, making sectors like consumer discretionary the season’s biggest laggards, Deutsche Bank and Citi analysts noted.
#Wall #Street #expects #strong #fourthquarter #earnings #driven #robust #economy