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US Q2 Earnings Reports Getting Started
After a strong start to the year, U.S. stocks have struggled to gain traction and strategists are now split on what's next.
According to the latest Bloomberg Pulse poll, the odds that the Q3 earnings season will pull the S&P 500 down are slightly higher than the pros. Companies are generally expected to have problems with earnings forecasts after Q3. A number of strategists are warning that US stocks are unlikely to gain earnings after Q3 due to higher valuations and still rising interest rates. Last week, the S&P 500 tumbled as markets priced in the consequences of expectations for higher global interest rates.
There is also a more pessimistic mood about when the dips in S&P 500 earnings will bottom out. More than half (52%) think the decline in EPS has bottomed out after Q3.
The worrying thing right now is that the declines in the US profit ratings have accelerated. Both professionals and retail chose further tightening of financial conditions as the biggest negative factor in Q2 results.
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