When it comes to the S&P 500, most companies have already forgotten about their third-quarter reports after two crazy weeks of them. As Wall Street turns its attention to the last three months of the year, however, more companies are feeling down, even though experts are still optimistic about business growth.
A study released by FactSet on Friday found that out of the 77 companies that have given profit forecasts so far this earnings season, 53 (69% of the total) have given more pessimistic predictions. That rate of growth is higher than the average rate over the last five and ten years.
That being said, FactSet says that Wall Street analysts still think that companies in the S&P 500 SPX 0.38% will make 12.2% more per share year over year in the fourth quarter. The experts’ predictions, on the other hand, tend to become less optimistic over time.
In the last three months of the year, there will be the busy holiday shopping season and maybe even more changes at work as President-elect Donald Trump gets ready to take office next year.
As a key part of Trump’s economic plan, higher tariffs have caused economists to worry that prices will go up for customers. But after Trump won the election last week, the markets went up. This was because people were less worried about how the race would turn out and more optimistic about a better business environment.
The Federal Reserve’s decision to lower interest rates also helped stocks rise. On Friday, the S&P 500 briefly crossed the 6,000-point barrier for the first time ever, which one strategist called “a psychologically significant milestone.”
Some experts said that the tech industry, whose biggest players can move the market, would likely be hugely helped by a Trump White House and a Republican-controlled Congress after the Biden administration took a tougher stance on corporate consolidation. The GOP now controls the Senate, but as of Friday, it wasn’t clear what would happen in the House of Representatives.
Wedbush analysts, led by Daniel Ives, said in a research note last week, “We believe a Trump administration will have a dramatically reduced regulatory framework that will be a major catalyst for accelerated tech M&A in the broader AI ecosystem and see a much more active Big Tech deal-hunting cycle. Lina Khan’s days at the FTC are now numbered in the eyes of the Street.”
Further down in that note, Wedbush said, “We believe that many innovative public and private tech players as well as strategic financial buyers have been waiting to dance on opposite sides of the dance floor at the Tech Prom.”
