After several attempts this month the S&P 500 SPX has finally managed to close above the 4,000 level. Happy Thanksgiving! Bulls will now want to see that barrier become support and will be eyeing the next hurdle, the 200-day moving average, currently around 4,062.
Ganry notes that the 12-month forward earnings per share estimate on the S&P 500 is currently at $235.34 which is 7% above the expected full-year 2022 EPS of $219.38. That’s too high, he reckons. That implies that S&P 500 companies can maintain their net profit margin next year. That’s “a completely detached assumption” for several reasons.
Ganry adds: “The fact that the Q3 net profit margin in S&P 500 is 11.9% and trending lower suggests that margins are coming down faster than expected”. Markets Markets are going into the holiday break on a subdued note. S&P 500 futures ES00 are slightly, with benchmark 10-year Treasury yields TMUBMUSD10Y barely changed at 3.754%. Oil CL.1 is again under pressure , however, as worries about soft China demand as Beijing implements more COVID-19 lockdowns.