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As US stocks reach new highs, corporate earnings expectations and optimistic sentiment cool down.
Jin10 data, October 13 – As the US stock market hovers near record highs, analysts' optimism regarding corporate earnings is cooling, indicating that the current market may face resistance during the earnings season. Citigroup's index tracking adjustments to US corporate earnings expectations (which measures the ratio of upward to downward forecast adjustments) has recently turned flat for the first time since August. Meanwhile, the forward price-to-earnings ratio of the S&P 500 index has reached 22 times, nearly 19 times higher than the average level over the past decade. Evercore ISI strategist Julian Emanuel pointed out that the price reactions during the earnings season are expected to be "severely divergent," making it difficult to serve as a catalyst for pushing the index higher, and current market valuations "almost fully reflect perfect expectations." RBC Capital Market strategist Lori Calvasina stated that compared to the previous quarter, the proportion of companies beating earnings expectations is expected to slow this season due to greater impacts from tariffs, "for the largest market capitalization..."
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