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Wall Street’s View on S&P 500 Profits Is Souring as Tariffs Loom

AinvestSaturday, Mar 15, 2025 8:05 pm ET
1min read

Wall Street’s confidence in Corporate America’s profit engine is fraying, threatening more turbulence ahead for a badly bruised US stock market. - Bloomberg

In the opening weeks of 2024, investors were poised and ready for another promising earnings season. With corporate America's profits in the S&P 500 index steadily climbing, expectations were set for a 4% year-on-year growth [1]. This optimistic outlook was further bolstered by the S&P 500's relentless march towards new records, breaking through the 5,000 mark for the first time [2]. However, beneath the surface of these impressive figures, Wall Street's confidence in Corporate America's profit engine is showing signs of fraying.

As recently as 2023, concerns about a potential recession and the Federal Reserve's aggressive interest rate hikes had cast doubt over the future growth prospects of US corporations. Yet, the arrival of 2024 brought with it a surprising turn of events. Strong US economic data, marked by lower inflation rates and impressive job growth, has led to a resurgence in investor confidence [2].

Despite this optimistic backdrop, analysts and experts are now expressing concern over the sustainability of corporate profit growth. Lee Ferridge, the head of macro strategy at State Street Global Markets, cautions that while the current economic conditions are favorable, they may not last forever [2]. Moreover, Lori Calvasina, the head of US equity strategy at RBC Capital Markets, admits that the unexpectedly strong start to the year has caught many investors off guard, including herself [2].

This renewed uncertainty surrounding corporate profits threatens to cast a long shadow over the US stock market. With Wall Street attempting to gauge when policymakers will be ready to cut interest rates, the market remains in a state of flux [2]. As the earnings season unfolds and investors scrutinize the financial health of America's largest corporations, the true extent of the damage to the profit engine will become clear.

References:
[1] Economist. (2024, October 22). America's growing profits are under threat. https://www.economist.com/business/2024/10/22/americas-growing-profits-are-under-threat
[2] NPR. (2024, February 12). The stock market sets new records as Wall Street's confidence in the economy grows. https://www.npr.org/2024/02/12/1230987886/the-stock-market-sets-new-records-as-wall-streets-confidence-in-the-economy-grows

Comments

Post
Big-Decision-1458
21 hour ago
If corporate profits take a hit, small caps might shine. Anyone diversifying?
0
greyenlightenment
21 hour ago
Market's jitters got nothing on my caffeine jitters. 😅
0
BenGrahamButler
21 hour ago
Diversifying like crazy, can't rely on $AAPL alone.
0
Elichotine
21 hour ago
Wall Street's jitters over tariffs make me think twice about my long positions. Time to hedge?
0
Didntlikedefaultname
21 hour ago
Tariffs biting into profit margins. Time to hedge bets and look beyond $SPX. Diversification might save the day.
0
NavyGuyvet
21 hour ago
Time to hedge those bets, folks!
0
tinyraccoon
21 hour ago
Tariffs are the new bear in town.
0
David stone
21 hour ago

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0
EmergencyWitness7
19 hour ago
@David stone How long were you holding your Bitcoin before selling it on Jan 25th?
0
Plane-Salamander2580
21 hour ago
S&P profits? More like lemonade with lemons.
0
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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