Wednesday, 26 July 2017 00:00

Why The Earnings Rally Will Stall

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(New York)

The current boom in stocks is arguably being sustained by a good string of corporate earnings. If it weren’t for the good performance of companies, the Trump-led rally probably would have flat lined a long time ago. Now Bank of America is contending that it may be a slip in earnings that ultimately brings this rally to an end. While the second quarter earnings season is going well, earnings for the end of the year could be a lot weaker, with third quarter downward earnings revisions spiking.

FINSUM: Barron’s is arguing that investors have reversed 50-75% of their Trump trades, which really begs the question as to whether this is purely an earnings rally at this point. We do think it is earnings that is keeping the market high, which means a poor season poses a big risk.

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