Analysts have set the bar high for the second-quarter reporting season on Wall Street, with US companies tipped to post the fastest quarterly earnings growth since 2021.
Already a subscriber?US company profits have been growing at the fastest pace in almost three years, providing a fresh boost to the sharemarket as it tests record levels in the second half of the year.
And with the S&P 500 notching a near-15 per cent gain in the first half of this year, strategists believe an ongoing rebound in company earnings will keep driving the US sharemarket higher. “However, looking forward, we expect valuations will remain roughly unchanged and earnings growth instead will lift the S&P 500 by 2 per cent to a new high of 5600 at year-end.”
The six largest companies on the S&P 500 – Amazon, Apple, Alphabet, Meta, Microsoft and Nvidia – are projected to grow earnings by 30 per cent in the second quarter, far higher than projections for the remaining 494 stocks of 5 per cent profit growth.However, the market consensus expects all five of the AI-related megacaps, which excludes Apple, to report a slowdown in sales growth, while four of them will also have a contraction in net margins.
Even Morgan Stanley’s chief strategist Michael Wilson, who is renowned for being one of the biggest bears on Wall Street,But JPMorgan’s chief market strategist Marko Kolanovic has remained steadfast that US shares will stumble in the coming months as analysts downgrade their earnings forecasts for the US megacap stocks.
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