Welcome to Extreme Investor Network, where we bring you the latest and most crucial updates in the world of investing. Today, we’re diving into the exciting realm of third-quarter earnings season and what it means for investors.
As banks kick off the earnings season on a strong note, UBS expects this momentum to continue. Despite a slight dip in stocks following September’s consumer price index report revealing higher than expected price increases, the market quickly rebounded. Thanks to strong third-quarter results from key players like JPMorgan Chase, Wells Fargo, and BlackRock, the S&P 500 reached a record high in early trading, setting the stage for a promising week.
UBS predicts that the upcoming earnings season will follow recent healthy trends, with headline S&P 500 EPS growth expected to slow to around 5-7%. However, excluding the energy sector’s impact, profit growth should hit 8-10%. The bank also highlights the positive outlook for the consumer discretionary sector, as lower energy prices relieve pricing strain on consumers and pave the way for potential positive surprises.
In particular, UBS points to the “Magnificent Seven” cohort as a leading force driving profit growth. These companies are benefitting from robust growth in AI investment spending and monetization, with projections showing them accounting for a significant portion of S&P 500 profits in the coming years.
Looking ahead, this positive earnings season sets the stage for a healthy backdrop for U.S. equities. UBS notes that historically, in non-recessionary environments, the S&P 500 tends to rise an average of 17% in the year after the Federal Reserve begins lowering interest rates. The bank forecasts the S&P 500 climbing to 5,900 by year end and 6,200 by June 2025, representing potential gains of 2% and 7%, respectively.
With this optimistic outlook and strategic insights, investors can navigate the evolving market landscape with confidence. Stay tuned for more expert analysis and actionable investment tips from Extreme Investor Network.