Over the past few weeks, the US stock market has been jubilant. Wall Street has shown great success, and this financial euphoria has overwhelmed market participants.
According to experts, the global financial market proved to be resilient despite rather negative reports on US inflation. Notably, the recent data unveiled stable inflation growth, thus strengthening the risk of maintaining a high interest rate by the Fed. Analysts explain such a result by better-than-expected earnings of Wall Street companies for the first quarter of 2024.
At the moment, 80% of companies in the S&P 500 index have presented their reports. Against this background, analysts recorded a 5% quarterly rise in earnings per share. This is the most considerable increase in one year since the second quarter of 2022. The current data exceeded forecasts of 3.2% growth, which were provided before the reporting season.
Despite the Fed's high interest rate, which usually hurts stock prices, strong earnings from most companies supported the market. According to Wall Street bulls, a jump in earnings allowed the index to advance by 8% in the first quarter of 2024. Preliminary estimates suggest that this trend will continue.
The rise in corporate earnings is boosting bullish sentiment concerning the fundamental indicators of the S&P 500 index. Expectations of the Fed rate decision and quite negative economic conditions failed to affect market sentiment.
Analysts seem to be optimistic because of a surge in net income (by 11.7%) in the first quarter of 2024. This is well above the average growth rate of 11.5%. Over the past five years, experts have recorded a significant improvement in this indicator. They believe that the driver of such an upturn is the reduction of expenses by Big Tech and some companies from other sectors.