The bull run in stocks may have further room for a stampede.
“We are in the early innings of a bull market where the earnings recovery story has barely begun,” Bradesco BBI’s head of equity strategy Ben Laidler told Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (video above; listen in here).
Laidler, whose résumé includes stints at HSBC and JPMorgan, thinks there’s a likelihood of two interest rate cuts this year from the Fed — which should fuel further investor excitement beyond expected strong earnings growth.
Those factors could help lift stocks at least 100% over five years, Laidler contended.
“Earnings might easily compound at 15% a year if the economy keeps chugging along and you get a little bit of multiple expansion, which I think lower interest rates would justify,” he said.
The current bull market for stocks is seen as starting in October 2022, when the S&P 500 (^GSPC) reached its most recent low. Since then, the index has gained a sizzling 55%.
The gains have been powered by enthusiasm around AI, which has driven names such as Nvidia (NVDA) and Apple (AAPL) to record highs.
This year, the momentum has carried the Dow Jones Industrial Average (^DJI) beyond 40,000 and the S&P 500 beyond 5,000.
The S&P 500 has managed to tack on a 15.3% increase in the first half of 2024. This is the 16th strongest start to a year since 1950, according to data from Truist chief markets strategist Keith Lerner. The S&P 500 has now risen in seven of the past eight months.
Part of Laidler’s thesis will be put to the test this coming earnings season, which begins with results from banks such as JPMorgan (JPM) and Wells Fargo (WFC).
FactSet pegs second quarter earnings growth for S&P 500 companies at 8.8%. If achieved, it will mark the highest year-over-year growth rate since the first quarter of 2022. It will also represent the fourth consecutive quarter of year-over-year earnings growth for the index.
Double-digit-percentage earnings growth is expected in the Communications Services (18.5%) and Information Technology (16.1%) sectors.
“We are in a very fundamentally supported market. Earnings are recovering, and rate cuts are coming,” added Laidler.
The outlook for AI stocks still looks strong despite big-time gains, Goldman Sachs portfolio manager Brook Dane said on Opening Bid. Listen in below.
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled, market-focused conversations and chats with the biggest names in business on Opening Bid. Find more episodes on our video hub. Watch on your preferred streaming service. Or listen and subscribe on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
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