Earnings Sentiment (Analyst Upgrades Minus Downgrades Across Markets) While there are pockets of optimism regarding earnings growth, earnings sentiment in the S&P 500 is on a downward trend. Image: Goldman Sachs Global Investment Research
Earnings Growth While mega-cap tech companies are expected to retain their market dominance, their earnings per share growth may slow down, potentially narrowing the gap between their EPS growth and that of other S&P 500 companies. Image: Goldman Sachs Global Investment Research
Percentage Contribution of Returns Between Dividends, Earnings and Valuation While multiple expansion has played an important role in boosting S&P 500 returns, future performance may depend more on earnings growth. Image: Goldman Sachs Global Investment Research
S&P 500 Earnings Estimates According to Morgan Stanley’s forecast, S&P 500 EPS is expected to grow to $271 in 2025 and $303 in 2026, reflecting an optimistic market view. Image: Morgan Stanley Wealth Management
Stocks – High Quality Relative Earnings Revisions Breadth and High Quality Factor Relative Performance In a late-cycle market, investors looking for stability might find high-quality stocks appealing, given their historical ability to provide robust protection against both market volatility and economic downturns. Image: Morgan Stanley Research
U.S. Earnings Revision While analysts anticipate a slowdown in the Mag 7’s earnings growth for 2025 compared to previous years, they still expect these tech giants to lead the market significantly. Image: Goldman Sachs Global Investment Research
S&P 500 Earnings and Estimates While earnings growth projections for 2025 are optimistic, they must be assessed in the context of current high valuations and market concentration, highlighting the need for investor vigilance. Image: Real Investment Advice
S&P 500 Fwd. Earnings Growth and Russell 2000 Fwd. Earnings Growth The recovery in EPS growth has been driven by a small number of large-cap companies, which may indicate a late-cycle extension in the economic cycle. Image: Morgan Stanley Research
Earnings of Tech Companies While U.S. tech stocks are riding a wave of strong performance driven by both hype and solid earnings fundamentals, non-tech stocks face prolonged stagnation in earnings. Image: Topdown Charts
S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio The Shiller CAPE ratio currently exceeds historical norms. While valuation metrics aren’t reliable timing tools, investors should be aware that prolonged periods of high valuations typically lead to lower future returns. Image: Morgan Stanley Research
S&P 500 EPS and Long-Term Trend in Earnings The S&P 500’s earnings trend remains robust, with projections indicating continued growth near the upper limits of its long-term trend channel. Image: Deutsche Bank