BlackRock Warns of US Earnings Stagnation

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Investors looking toward U.S. corporate earnings growth to revive the rally in the benchmark S&P 500 may be disappointed as inflation remains volatile, strategists at the BlackRock Investment Institute warned in a note Monday. The S&P 500 is down nearly 8% from its July...

Investors looking toward U.S. corporate earnings growth to revive the rally in the benchmark S&P 500 may be disappointed as inflation remains volatile, strategists at the BlackRock Investment Institute warned in a note Monday. The S&P 500 is down nearly 8% from its July highs as a selloff in Treasuries has pushed yields near 16-year highs, sapping investor enthusiasm for equities.

While the firm is underweight broad equities for the next 6 to 12 months, it remains bullish on mega-cap technology companies, as well as healthcare and Japanese stocks, it noted. Overall, stock valuations look elevated, especially given the higher yields available in the bond market, the firm noted.The bearish call from BlackRock, the world's largest asset manager, comes as investors closely watch earnings for signs that the U.S. economy remains resilient in the face of rising interest rates.

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