In the current financial landscape, F.L.Putnam Investment Management Co. Chief Market Strategist, Ellen Hazen, suggests a shift in focus from interest rates to earnings as the primary driving force for stocks.
Despite the Federal Reserve delaying potential interest rate cuts, Hazen points out that earnings are “continuing to accelerate,” playing a crucial role in benefiting the market. According to Hazen, lower interest rates may not be the dominant factor influencing stocks at the moment.
While economic data experiences a cooling trend, profits remain “pretty good,” leading Hazen to emphasize the growing influence of earnings. She highlights that stock reactions are influenced by the starting valuation, illustrating scenarios where higher-valued stocks face declines on negative earnings results, while smaller companies see increases despite missing estimates.
In summary, Hazen underscores that the current market narrative revolves around earnings momentum rather than Federal Reserve policy. Despite past optimism surrounding rate cuts, she believes consecutive strong profit periods should redirect investor attention towards the underlying strength of companies.
