S&P 500’s Future Growth Hinges on Tech Stocks During Q4 Earnings Season
The S&P 500 (SPX) heavily depends on technology stocks to drive its growth during the Q4 2024 earnings season, per a recent update from strategists at Barclays (LON:BARC). Here are the key insights and implications for the market:
Key Highlights
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January Performance as a Forecast Tool:
Usually, the S&P 500’s January performance foreshadows annual trends. A January decline generally indicates a +2.5% median return over the next 11 months, whereas a gain of over 1.5% in January typically results in a +11.4% median return for the year. -
Tech Stocks as Growth Catalysts:
Currently, tech is the leading growth driver for the S&P 500. Analysts have noted significant downward revisions in non-tech sectors, reflecting bearish sentiment. -
EPS Growth Expectations:
Most non-tech sectors are expected to post EPS growth below longer-term averages. However, a rebound in Q1 2025 is anticipated as companies adjust. -
Consensus EPS Forecast:
The fiscal 2025 consensus EPS forecast has decreased to $274, slightly lower than Barclays’ estimate of $271.
Investor Implications
- Technology stocks play a crucial role in supporting S&P 500 growth, highlighting the need for vigilant monitoring of sector performance during earnings season.
- Investors should prepare for potential volatility in non-tech sectors grappling with low growth expectations and negative revisions.
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