The evolution of business #beneficios , which “return to first position as the great engine of the stock market by 2024, after the gains in shares this year were due to the revaluation of prices, which now they are back above the long-term averages.” The expert estimates that there will be double-digit profit growth, which will be greater in certain sectors, such as technology, healthcare or industry.
CONTRADICTION:
Profits once again occupy first position as the great driver of the stock market for 2024, after the gains in shares this year were due to the revaluation of prices, which are now once again above long-term averages .
S&P 500 earnings growth forecasts point to a strong rebound to 12%, from 1% this year. There is great skepticism about the possibility of such an acceleration, contradicted by the economic slowdown that is occurring in the United States and that analysts often cut estimates as the year progresses.
But the drivers of 2024 benefits are less GDP-driven than usual, and benefit cuts are typically modest. We see double-digit earnings growth expanding healthily from technology to healthcare and industrials.
DROP:
Earnings growth estimates are typically cut throughout the year (see chart), as we have seen in 68% of the last 25 years, as analyst optimism gradually faces market reality.
The rare big upside surprises have been driven by surprise political support (tax cuts), impossible in the run-up to the 2024 election, or a positive macroeconomic shock (such as the Great Financial Crisis and Covid surges) which is unlikely as the US economy cools cyclically.
The average EPS cut is -7%, but excluding the extremes of the crisis, it falls to -2%. This would still leave the S&P 500 on track to return to double-digit earnings growth in 2024.
DRIVERS:
US GDP growth is expected to slow from 2.6% this year to less than 1% next. This makes many doubt the expected sharp acceleration in S&P 500 earnings growth. This growth is driven by the growing adoption of AI, the relief of profit margins thanks to lower inflation and the prospects of landing smooth GDP.
The healthcare sector is expected to lead profit growth next year, with a 19% rebound after a drastic 20% drop this year due to vaccines, and the technology and communications sector is expected to grow. more than 15%.
Commodities are also registering modest growth after their profits fell by more than 20% this year. The biggest slowdown in growth is expected in Tesla and Amazon-dominated consumer discretionary goods.
This content is for informational and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. CFDs are leveraged products and carry a high risk to your capital
