But Morgan Stanley's Mike Wilson worries there's weakness lying below the surface.Investors are neck-deep in earnings as second quarter reports roll in, and so far the news has been good, but not great.
According to Evercore macro research analyst Julian Emanuel, 54% of the S&P 500 had reported results as of Friday. By then, sales had risen 3.6% year-over-year, beating consensus estimates by 1.6%, while earnings were up 2.3%, also beating by 6.3%. In a note to clients from earlier in the week, Morgan Stanley chief US equity strategist Mike Wilson wrote that he anticipates earnings results will be better than Wall Street predicted. However, that has more to do with beating estimates that were lowered during the previous quarter, rather than the superior strength of balance sheets across the market.
"The bar for 2Q earnings has been lowered with 2Q growth estimates down 15% from 1Y ago and 3% lower in the previous 3 months," he wrote.Instead of worrying about which stocks will report strong earnings in the next few days, however, Wilson is focused on finding the companies with stable profits that will allow them to outperform well into the future.With the S&P 500 up nearly 20% year-to-date, it can seem like things are progressing smoothly for the market as a whole.
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