Earnings forecasts are derailed into bullish zone for S&P 500
Wall Street equity strategists have been voicing a different outlook for the stock market regardless of what has transpired over the past few months. They perversely remain loyal to upbeat earnings projections, marking 4,743 as the year-end level for $S&P 500 Index(.SPX.US$ , which implies a 21% upside from Wednesday’s close after the index demolished a dead-cat bounce on the day.
Yet the trend in strategist revisions may matter more than the actual level of the forecasts, as more downward adjustments are in the offing after retail juggernauts like $Walmart(WMT.US$ and $Target(TGT.US$ both cut their growth outlooks this week, showing even stores known for bargains remain vulnerable to the highest inflation in 40 years.
According to research conducted by Bloomberg tracking strategists' May projections for the year-end S&P 500 index value over the past 23 years, there have been fourteen times where projections undershot the actual index value and nine times strategists overestimated the index performance.
However, the underestimates were often close calls while some of the overshoots were egregiously wrong, including most notably in 2008 and every year of the dot-com bust.
There can be no denying that with all the disruptions weighing on the market—pandemic, supply chain snarls, inflation, monetary tightening, soaring labor costs, etc.—2022 may join those ignominious years in market history.
Apparently, the market isn't buying what the street is selling, and you might be better off ignoring the consensus if you take those projections with a grain of salt.
Source: Bloomberg
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo News Official Account
How do analysts evaluate the market?
15KFollowers
8Following
35KVisitors
Follow