BlackRock Investment Officer: U.S. stock earnings expectations are too optimistic

Gelonghui, April 9｜Helen Jewell, International Chief Investment Officer of BlackRock's Fundamental Equities division, stated that stock earnings forecasts will need to be revised lower due to inflationary impacts caused by the Middle East war. "Currently, earnings forecasts for this year are still as high as 15% to 18%, so there is considerable room for downward revisions," she said. Forecasts of profit stability in the consumer sector are difficult to justify, especially considering interest rates and the inflationary impact of the Middle East situation. There are already early signs that earnings expectations may change. After analysts spent weeks raising their forecasts, Citi’s US Earnings Revision Index turned negative last Friday, with the number of downgrades exceeding upgrades by the largest margin in nearly a year. Nevertheless, under conditions of high uncertainty and the risk of soaring price pressures, analysts’ forecasts still remain high. Compiled data shows that the market generally expects S&P 500 earnings per share to grow by 16% this year, which would be the strongest performance since 2021. The Q1 earnings season will officially kick off next week. Jewell said the earnings growth potential of energy and materials stocks is offset by downside risks for industries such as aviation, suggesting that overall earnings will remain relatively stable.