Corporate America’s sour profit outlook Cloud Equity Rally
(Bloomberg) – Under a solid fourth quarter revenue season, there is a worrying development that could put dents in bull cases for US stocks.
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Among the companies that issued guidance from the next quarter onwards, they provide estimates that trail analysts have expectations. The progressive revenue measure that compares company forecasts with analyst forecasts is the lowest in a year since it plunged to the level it last saw in early 2016, data compiled by the Bloomberg Intelligence Show.
There are many reasons for doubt. A full-scale trade war will weigh the export demand of multinational companies against overseas profits. At home, inflation remains sticky and the Federal Reserve appears to hurry and cut interest rates.
“The uncertainty that has entered this year has been huge over the years, with management trying to navigate it with more modest guidance,” said Jim Tierney, Chief Investment Officer of Intensive US Growth at AllianceBernstein. Masu. “The results of fourth quarter revenues are strong, but did not fully follow the guidance for 2025.”
Historically, stocks have tended to respond to guidance more than actual results, and traders reward companies that have provided forecasts that are better than expected. Companies that outperformed their profit and revenue this revenue season were 6.7% ahead of the S&P 500 index within one day of reporting results. This is the second since early 2020, and BI data shows.
Of course, C-Suite executives could prove conservative in forecasts in the coming months, and the company would not be able to clear the results as revenue estimates decrease, making it a rallying stage. is set. Meanwhile, analysts were hesitant to revise their outlook for the future this year until more companies provide profit guidance. Just 80 S&P 500 companies have issued first quarter outlook so far.
“This is a classic dance of Wall Street analysts and company mentoring, with a very ambitious estimate being introduced from the cell side and companies leading them to beatable numbers,” said Primi Wealth. said Patrick Armstrong, chief investment officer of the company. “The big question is when does customs have actual teeth?”
Even the outlook for all analysts for 2025 for the S&P 500 has been steadily declining since the beginning of the year. According to data compiled by BI, S&P 500 companies have grown 10% this year, down from nearly 13% in early January. No forecasts have occurred in 2026, and analysts expect profits to rise 14% next year as well.