Stocks have whipsawed this week as the yen carry trade unwound, recession fears rose, and volatility ran rampant in the market.
But under the surface, the long-term case for stocks has continued to come in strong this quarter, fueling the bull case for stocks per some on Wall Street. S&P 500 earnings are set to grow more than 11% in the second quarter, marking the highest year-over-year earnings growth rate reported by the index since Q4 2021.
This is part of the reason Evercore ISI’s Julian Emanuel is calling the recent pullback “a buyable correction in a bull market not the end of the bull market.”
“Earnings drive stocks in the long term,” Emanuel wrote in a note to clients on Thursday. “[Earnings] estimates holding relatively steady for 2024 and 2025, despite some signs of strain in the U.S. economy, bodes well as we head into an historically contentious election.”
DataTrek co-founder Nicholas Colas listed corporate earnings as a reason why he’s still bullish on the market despite the recent volatility.
“The bottom line here is that both earnings and margins are extremely healthy just now, so US companies should be able to sustain high levels of profitability even if we do see a recession over the next 12 months,” Colas wrote in a note to clients on Thursday.
