This strong performance comes despite weak sentiment and volatility linked to trade tensions. However, recent economic data suggest that underlying momentum is weakening. “The ISM Services PMI for July showed the service sector of the economy barely expansionary at 50.1,” she says, noting that the manufacturing gauge has been below the 50 mark in 31 of the past 33 months.
US corporate earnings have outpaced forecasts in the second quarter, but signs of a slowing economy are growing, prompting Nuveen chief investment officer Saira Malik to call for a pivot towards high-quality income assets such as preferred securities.
“With 90% (450 companies) having released their quarterly financial results as of 8 Aug, the blended earnings growth rate stood at +11.8% y-o-y,” she says. The figure is well above the +4.9% consensus estimate at the end of June, which had been revised down from +9.3% in early April. If maintained, it would mark the third consecutive quarter of double-digit earnings growth.
