U.S. stocks have stormed higher this year, but some investors say lackluster earnings projections threaten their ascent.
Stocks have rallied as the economy has proved more resilient than expected and investors bet the Federal Reserve could soon conclude its aggressive campaign of raising interest rates, which crushed stocks in 2022. Excitement about artificial-intelligence technology has also sparked a frenzy in markets, boosting megacap tech stocks such as Nvidia and Microsoft. The S&P 500 is up nearly 20% this year, and the tech-heavy Nasdaq Composite has gained 37%.
But while stocks have climbed, corporate profits have fallen. Companies in the S&P 500 are set to log a roughly 7% year-over-year decline in earnings for the second quarter, according to a FactSet blend of reported results and consensus analyst estimates. That would mark the largest quarterly earnings decline for the index since the second quarter of 2020 and a third consecutive quarter of declining profits.
Read the full story on The Wall Street Journal here.