S&P’s $8 Trillion Rally Will Be Tested by Tricky Earnings Season

Published On Oct 6, 2024, 9:00 AM

The S&P 500 has experienced a significant 20% increase in 2024, adding more than $8 trillion in market capitalization. This rally has been driven by expectations of easing monetary policy and a favorable profit outlook. However, analysts have recently reduced their earnings expectations for the third quarter, now expecting only a 4.7% increase in quarterly earnings, down from earlier projections of 7.9%. With the upcoming earnings reports, investors are cautious, especially considering geopolitical risks, macroeconomic uncertainties, and a tightly contested presidential election. Volatility in the markets is expected, as historical patterns suggest that following significant gains, the subsequent October often yields negative returns for the S&P 500. Despite these concerns, lower earnings expectations may provide companies with the opportunity to surpass forecasts.