While missiles fly and oil prices jitter in the Middle East, some Wall Street strategists are calmly upgrading their profit forecasts for Corporate America — because apparently nothing says “relax” like expected 20% earnings growth in the next year.
The S&P 500’s resilience has bulls chuckling quietly, even as geopolitical headaches mount.
Corporate earnings, the quiet hero of the decade-long bull run, are quietly flexing their muscles again. Sell-side teams at Morgan Stanley and Barclays have been nudging their outlooks higher, politely declining to let soaring oil or consumer jitters ruin the vibe.
Data compiled by Morgan Stanley shows S&P 500 profits projected to jump 20% over the coming 12 months — a level historically seen mostly when economies are dusting themselves off from recessions. Mike Wilson, the firm’s chief US equity strategist, noted this setup keeps the odds low that the current oil spike will derail the business cycle entirely.
Analysts now pencil in 11.9% earnings growth for the first quarter, up from 10.9% before the latest flare-up in Iran. Forecasts for the next three quarters have edged higher too, with earnings and sales expectations lifted by 1.9% and 1.5% respectively.
Barclays joined the upbeat chorus on Tuesday, raising its year-end S&P 500 target and earnings view, crediting a sturdy US economy and those ever-reliable technology high-flyers.
The optimism carries a classic market wink: profit outlooks have actually brightened even as share prices wobbled — a rare combination during geopolitical drama. History suggests such moments have often rewarded investors who simply looked past the short-term noise.
Of course, the party isn’t risk-free. Should oil park itself at $110 a barrel for the rest of the year, JPMorgan data warn that earnings estimates could trim as much as 5 percentage points. For now, though, Corporate America’s growth machine appears determined to keep humming, war headlines or not.
Leave a Reply