Summary List Placement
During the first quarter of last year the pandemic began to tank the economy, making the bar for stocks to surpass analyst estimates in the first quarter of this year incredibly low. In fact, according to JPMorgan, analyst consensus calls for earnings per share to increase an incredible 21% year-over-year across the market.
But even that is “likely still too conservative in the face of booming economic activity,” according to a recent note to clients.
So far, earnings have lived up to investor’s high expectations. Companies like Snap and Chipotle recently reported impressive growth over the past year, while results from the big banks blew away first-quarter estimates.
But the busiest portion of the earnings season is yet to come. The weeks of April 26 and May 3, when two-thirds of the companies on the Russell 1000 report earnings, will bring an avalanche of announcements that could either help the market sustain its upwards momentum, or stall it.
JPMorgan believes there’s even more upside ahead. In a recent report, analysts led by Marko Kolanovic, the chief global markets strategist, said that the combination of “strong recent readings in retail sales, housing, manufacturing, and payroll data” indicate that the economy is on a roll. In addition, with vaccination rates rising, and over 50% of US adults having already received at least one vaccine dose, the reopening trade is regaining strength.
The reopening trade entails investing in a recovering US economy as businesses rebound to pre-pandemic levels of production. Investors have seen the reopening trade coming for a while, and some analysts have noted a recent pullback from the stocks and sectors that comprise the reopening trade, like value and cyclical stocks. But the team at JPMorgan believes that “the reopening and reflation trade will resume with a move that will be …read more
Source:: Business Insider