The worst earnings season in three years is about to begin, but stock strategists say the market should be able to ignore weaker profits and continue to edge toward all-time highs.
The worst earnings season in nearly three years is about to begin, but stock strategists say the market should be able to look right past declining profits and continue to reach for all-time highs, as long as trade talks between the U.S. and China continue to show progress.
As for earnings, Refinitiv expects a 2.2% decline in first quarter profits for the S&P 500 companies, but those lower results are expected to be the trough. Earnings growth is expected to rebound to 2.8% in the second quarter and by as much as 9% in the fourth quarter. The first quarter decline would be the first negative earnings period since the second quarter of 2016.
Strategists said any number of factors could be the catalyst to push stocks to records, including earnings season, if companies beat lowered guidance and their outlooks are good. Stocks could also ride higher on a better outlook for the U.S. economy, after a batch of better data including Friday's March jobs report.
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