Optimism for Stocks in 2024 Bolstered by Strong Earnings Outlook

The stock market’s most important driver, earnings, is on a strong upward trajectory, according to recent data and analysis. S&P 500 earnings grew by 6% in the first quarter, with a notable 10% growth when excluding Bristol Myers-Squibb’s dismal earnings. Projections for future earnings are also looking promising, with estimates showing an 11.4% growth in 2024 and a 14.2% growth in 2025.

UBS Investment Bank’s US equity strategist, Jonathan Golub, raised his year-end S&P 500 target to 5,600 from 5,400, citing the strength of earnings. Other Wall Street strategists have also been increasing their year-end targets, pointing to declining economic “tail risks” and improving growth estimates.

Deutsche Bank’s chief global strategist, Binky Chadha, believes that the S&P 500 could reach 6,000 by the end of the year, driven by accelerating earnings growth. While Big Tech’s growth has remained strong, other sectors like Cyclicals and Defensives are also showing healthy earnings growth.

Analysts like Ohsung Kwon from Bank of America emphasize the broadening out of earnings growth beyond tech giants like Nvidia, signaling a positive trend for the overall market. As companies shift from cost-cutting to increased demand and revenue growth, investors are optimistic about the market’s potential for the rest of the year.

Overall, the outlook for the stock market remains positive, with strong earnings growth driving optimism among investors and analysts alike.