Latest news with #NathanielWelnhofer
Yahoo
21-05-2025
- Business
- Yahoo
US stocks need earnings boost to regain edge over global peers
(Bloomberg) — Six weeks into a torrid rebound, US stocks are still laggards in global equity markets this year. For them to sustain the rally and reclaim their usual spot at the top of the pack, Corporate America's profit engine needs to rev back up, analysts at Bloomberg Intelligence say. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The S&P 500 Index (^SPX) has underperformed a gauge of 22 developed markets outside of the US since late last year as the pace of US earnings growth relative to the rest of the world narrowed, according to an analysis by BI's Nathaniel Welnhofer. The last time such a phenomenon occurred was in 2017 when the US stock benchmark's earnings growth trailed its overseas peers. 'US equity outperformance relative to international markets has historically hinged on the ability of US companies to deliver faster earnings growth, a dynamic that could challenge the American exceptionalism narrative,' Welnhofer said. US earnings growth eclipsed that of other developed markets by 13% for the 12-month period through December, but that edge has since narrowed to 9% and could decline further as companies struggle to navigate the toll of tariffs on their bottom lines, according to BI. So far this year, the S&P 500 has underperformed the MSCI World Index excluding the US by roughly 13 percentage points. While US stocks have benefited from softer rhetoric by the Trump administration around trade — particularly from the temporary truce with China – their recovery back to pre-tariff highs trails other major global markets. The S&P 500 is still roughly 3% below its Feb. 19 record, while the MSCI ex-US hit a new high Tuesday. Even though the S&P 500 has climbed roughly 19% from its April 8 low, some Wall Street pros have questioned the durability of the advance. At Morgan Stanley's wealth management division, Chief Investment Officer Lisa Shalett said US stocks' round-trip seemed unreasonable against a backdrop of slowing earnings growth. 'The earnings environment is critical to the sustainability of the recent move,' said Keith Buchanan, senior portfolio manager at GLOBALT Investments. With trade policy still in flux, companies are forced to fly blind through an ever-changing operating environment that leaves little confidence in making business decisions or providing guidance, he said. Earnings outlooks this reporting cycle from corporations across the US have foreshadowed a dire picture about what's ahead, with executives citing rising costs, weak consumer sentiment and low business confidence due to President Donald Trump's levies on global trading partners. So-called profit guidance momentum, a measure of the share of S&P 500 members that lifted their earnings outlooks compared to those that maintained or lowered views, fell to the lowest level since at least 2010, according to an analysis from BI equity strategists Gina Martin Adams and Wendy Soong. Meanwhile, investors appear to be less skeptical about corporate profits, if valuations are any guide. The S&P 500 is trading at 22 times projected earnings in the next 12 months, a multiple that's 19% above its long-term average. 'We feel that the market valuations seem more confident than the rhetoric we're seeing from corporations and something has to give,' Buchanan said. Why Apple Still Hasn't Cracked AI Anthropic Is Trying to Win the AI Race Without Losing Its Soul Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
21-05-2025
- Business
- Bloomberg
US Stocks Need Earnings Boost to Regain Edge Over Global Peers
Six weeks into a torrid rebound, US stocks are still laggards in global equity markets this year. For them to sustain the rally and reclaim their usual spot at the top of the pack, Corporate America's profit engine needs to rev back up, analysts at Bloomberg Intelligence say. The S&P 500 Index has underperformed a gauge of 22 developed markets outside of the US since late last year as the pace of US earnings growth relative to the rest of the world narrowed, according to an analysis by BI's Nathaniel Welnhofer. The last time such a phenomenon occurred was in 2017 when the US stock benchmark's earnings growth trailed its overseas peers.
