According to Brian Belski, one of the leading investment strategists, the US stock market has avoided an "earnings apocalypse" following third-quarter financial results and is set for further gains.
Earlier, experts were concerned that US equities had started to rise only by the end of 2023. However, the market managed to recover and showed an impressive rally. At the same time, Belski highlighted remaining pessimism among investors. "Despite an impressive month-to-date gain thus far, there is still a fair amount of negativity and concern regarding stock market direction," he noted.
Nevertheless, the expert assumes that pessimism could serve as fuel for further gains. "The extremely strong start to 2023 provided a buffer for recent weakness and starts that strong have typically led to continued gains even with bumps along the way," Belski said. According to him, investors do not take into account the resilience of corporate earnings, which have been quite high this year.
Most companies are now back in the black despite a short-term decline in earnings. Notably, 83% of the 94% of S&P 500 companies have reported strong earnings for the third quarter (up 7% on average). Meanwhile, third-quarter earnings per share for the S&P 500 is forecast to have grown by 11% (excluding the energy sector).
