Earnings reactions will be “be varied and violent for stocks, not an upside index catalyst,” Evercore ISI strategist Julian Emanuel wrote in a note, adding that the market was already “priced near perfection.”
Equity analyst sentiment toward corporate profits is losing momentum at a time when US stocks are trading near record highs, suggesting the rally could face speed bumps this earnings season.
A Citigroup Inc index tracking US earnings revisions — the number of analysts upgrading versus downgrading estimates — has turned flat for the first time since August. At the same time, the S&P 500 is trading at 22 times forward earnings, above the average over the past decade of nearly 19 times.
