Bullish Investor Sentiment Left Unsupported; Stocks Set to Crash?89 views 2013-06-19 00:51 Tags: corporate anywhere continue investor blank
If one were to look at the current state of the stock market, because of the substantial run-up in prices, one would think that investor sentimentis being based on the bullish opinion that corporate earnings will continue to rise.
However, a look below the surface would reveal that corporate earnings are not growing anywhere near the levels necessary to sustain the current enthusiasm in investor sentiment.
The corporate earnings estimates for the second quarter of 2013 are currently 1.1%, which is a drop of approximately 75% from earlier estimates of 4.3% made by analysts for that quarter. (Source: FactSet, June 14, 2013.)
If corporate earnings do come in at 1.1% for the second quarter, while that would be the third consecutive quarter of growth for corporate earnings, eight of 10 sectors will see a decrease in corporate earnings growth. With 86 companies issuing negative guidance for corporate earnings during the second quarter, as opposed to 21 issuing positive guidance, corporate earnings are clearly stagnating.
Continue Reading: Bullish Investor Sentiment Left Unsupported; Stocks Set to Crash?