US Stocks Poised for Record Highs as Earnings Take Center Stage
As the US presidential election looms large, investors are focusing on the strength of corporate earnings to drive the stock market forward. According to a recent survey, the S&P 500 Index is expected to approach 6,000 by year-end, a record milestone that would extend the index’s 23% gain in 2024.
Earnings Optimism Trumps Election Uncertainty
Despite the uncertainty surrounding the election, investors remain bullish on US stocks, with three-quarters of respondents expecting this earnings season to give the benchmark a boost. The strength of Corporate America’s results is seen as more crucial for the stock market’s performance than who wins the November vote or even the Federal Reserve’s policy path.
Tech Giants Expected to Lead the Charge
The so-called Magnificent Seven – Apple, Microsoft, Alphabet, Nvidia, Meta, and Tesla – have driven the brunt of the equities advance since last year. While they trailed last quarter, survey takers anticipate the tech giants will take the lead again, with 75% expecting them to either beat or perform in line with the rest of the market this quarter.
Financials Also Expected to Shine
In addition to tech, financials are also expected to lead the S&P 500 this quarter. The sector is up 5% in October, buoyed by strong earnings from Wall Street. Bank stocks tend to do well when the Fed cuts rates, which stands to boost borrowing and other economic activity.
Investors Focus on Fundamentals
As the election approaches, investors are focusing on the fundamentals of the market, rather than getting caught up in emotions. “I know the election brings a lot of emotion depending on whether one’s candidate wins or not, but don’t let that come into your portfolio,” said Brian Spinelli, co-chief investment officer at wealth advisory firm Halbert Hargrove.
Nvidia Earnings in Focus
One event that tech-stock watchers will be focusing on is Nvidia’s earnings, to be released in November. The company’s last report drove the chipmaker’s shares down in the following days. This time around, the biggest group of survey respondents, 45%, see the results pushing the stock up.
Conclusion
As the US stock market continues to rally, investors are focusing on the strength of corporate earnings to drive the market forward. With tech giants and financials expected to lead the charge, investors are optimistic about the market’s prospects, despite the uncertainty surrounding the election. By focusing on the fundamentals of the market, investors can make informed decisions and avoid getting caught up in emotions.
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