JPMorgan Chase & Co. strategists predict that US firms will significantly outperform their European counterparts in profit growth during the current earnings season. Mislav Matejka, a prominent strategist at JPMorgan, highlights that expectations for S&P 500 companies have been lowered, with a median estimate of just 3% growth in Q4 earnings. In contrast, European firms are projected to see increases of 5% and 9% for cyclicals and defensives, respectively. This disparity is underscored by the Stoxx 600 Index's underperformance, lagging behind the S&P 500 by over 17 percentage points throughout 2024. [e60d846f]
Early earnings reports support this outlook, as major US banks like JPMorgan and Goldman Sachs have exceeded expectations, showcasing the resilience of the US financial sector. However, Eli Lilly's disappointing forecast serves as a reminder of the challenges that some companies face. Matejka warns that European stocks may encounter a difficult landscape, particularly due to the uncertain recovery trajectory in China. [e60d846f]
Additionally, Citigroup's Scott Chronert anticipates that S&P 500 firms will experience larger-than-average profit beats, further solidifying the expectation that US companies will lead in earnings growth this season. This trend reflects broader market dynamics where US firms are better positioned to capitalize on current economic conditions compared to their European peers. [e60d846f]