As the U.S. stock market approaches record highs, investors are turning their attention to the upcoming corporate earnings season, which begins next week. The S&P 500 has surged approximately 20% year-to-date, currently trading at 21.5 times future earnings estimates, significantly above its long-term average of 15.7. Analysts expect earnings to climb by 4.7% in the third quarter, with UBS suggesting a more optimistic growth rate of 8.5% when accounting for historical surprises [73d47795].
BMO Capital Markets' chief investment strategist, Brian Belski, recently raised his year-end price target for the S&P 500 to 6,100, attributing this bullish outlook to the Federal Reserve's recent 50 basis point rate cut and favorable seasonal data. Belski's previous target was 5,600, and he anticipates strong performance in the fourth quarter, noting historical trends that show the S&P 500 averages returns of around 6% during similar periods [32dd5985].
In addition, RBC Capital Markets has also raised its 2024 price target for the S&P 500 from 5,300 to 5,700, while expressing caution about potential near-term pullbacks due to uncertainties in the consumer market and the upcoming election. RBC's preliminary median price target for 2025 stands at 6,159 [f2670a20].
The earnings reports from major banks such as JPMorgan Chase, Wells Fargo, and BlackRock, set to be released on October 11, are particularly anticipated as they may provide insight into the health of the financial sector and overall economic conditions. Additionally, consumer price data expected next week could influence the Federal Reserve's rate cut expectations, further impacting market sentiment [73d47795].
Meanwhile, S&P Global has raised its full-year profit forecast following a 30% increase in Q2 adjusted earnings, now projecting earnings between $14.35 and $14.60 per share. This reflects strong demand for financial analytics and suggests a robust outlook for the company [7dfcd1a7].
Citi strategists have noted that despite ongoing recession fears, S&P 500 earnings remain resilient. They maintain a $250 EPS forecast for the S&P 500 in 2024, slightly above the current consensus, and recommend a 'growth is defensive' approach to stock selection [a4b00697].