With 82% of the companies in the SP500 now having reported their 4Q23 results, the theme of “earnings growth” is clearly back. YoY earnings growth of +14%, which is the best showing since 4Q21. We think earnings continue to grow double digits for 2024 (we are expecting better growth in the back half of the year) and 2025.
There’s a reason why stocks basically went nowhere from October 2021 to October 2023: corporate earnings were basically flat.
There’s also a reason why the SP500 has returned approximately +340% since January 2009 thru December 2023: corporate earnings for the SP500 went up +350% over similar time frame.
The best, most highly correlated variable for the direction of the stock market over time is the direction of earnings over time. EDSP…earnings drive stock prices.
Source: Jones Trading and CBilello Research as of February 20, 2024
Richard Barrett
Chief Investment Officer
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