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January 15, 2025

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

  1. 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.

  2. 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.

  3. 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.

  4. 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.

For more detailed data and earnings performance parameters, check the entreprenerdly.com for financial analytics and reports.

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