A 'robust' earnings outlook is driving further optimism for stocks in 2024

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Bank Of America News

Earnings Growth,Earnings Estimates,Binky Chadha

Earnings estimates for the S&P 500 holding up better than normal is one of the key reasons Wall Street strategists are optimistic about the path for stocks...

This comes as earnings estimates for future quarters are on the rise too. Consensus now sees earnings growing 11.4% in 2024, up from a projection of 10.9% on April 5. In 2025, earnings growth estimates have moved up to 14.2% in 2025 from the 11.6% growth seen that day.

This isn't an issue in itself, per Chadha. He believes the robust earnings growth seen in this group, which includes the), is "extremely likely to slow at some point." And that will come as positive developments have been brewing under the surface in other pockets of the market. Strategists like Kwon say the most notable blip in the fundamental story for stocks has been cost-cutting driving earnings growth, not increased demand and booming revenues. Kwon and Bank of America remain steadfast in their belief this will change later this year as companies in the industrial sector have signaled they believe they've hit the trough of declining demand in their cycle.

"The market tends to sniff out and say at some point, OK, now we have to actually see real demand come back online," Gordon told Yahoo Finance.

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