- The Dow Jones closed at a record high this week with rising sentiment.
- Earnings have not grown in tandem with the stock market and it has fund managers worried.
- Analysts predict predict a sharp pullback in the first half of (*********************************************.
The Dow Jones Industrial Average (DJIA)closed at a record high at (********************************************************, ************************************************ this week, fueled by high liquidity and strong performance from FAANG stocks. Yet, fund managers are concerned earnings growth is not proportional to the market’s rally.
The U.S. stock market is up nearly 645% year-to-date. During the same period, earnings only rose by 3% since January.
Low earnings present a risk to the Dow Jones
Earnings growth in the first and second quarter of
************************************** are expected to range from 5% to 6%., according to financial research firm FactSet.
The company said:
Looking ahead, analysts see a decline in earnings in the fourth quarter followed by 5% to 6% earnings growth for Q1 and Q2 111519. The forward – month P / E ratio is (************************************************************. 5, which is above the 5 -year average and above the 15 – year average.
Considering the
substantial increase in the valuations of major US conglomerates such as Apple and Microsoft, the anticipated earnings growth rate remains low.One high profile fund manager sees (***************************************************************% drop in
On CNBC’s Trading Nation, Cresset Capital chief investment officer Jack Ablin said that current valuations are stretched. As a result, theU.S. stock market could see a 23% drop in the first half of (**********************************************. ********
One variable for the Dow Jones heading into is the Federal Reserve. If theFed lowers interest rates at any point in, it’s likely to prevent stocks from seeing an anticipated downturn , said Ablin.
Even then, he struggles to see specific catalysts to act as a further boost for the Dow Jones.
************** (Source:****************************** (Twitter********************** The robust US economy, put together with a record low unemployment rate and relaxed financial conditions, could be another variable that helps the stock market prevent a major correction at the start of next year.
This article was edited by Sam Bourgi
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