Tags: earnings | growth | stock | rally

Money Managers: Corporate Profit Growth Must Accelerate for Stock Rally to Continue

By    |   Monday, 07 July 2014 10:30 AM

Many investors have grown excited with a stock market that is routinely hitting record highs, with the Dow Jones Industrial Average topping 17,000 last Thursday.

But money managers say profits will have to rise faster to keep the five-year bull market going, The Wall Street Journal reports.

"People are going to want to see an improvement in earnings," Greg Luttrell, manager of the J.P. Morgan Dynamic Growth Fund, tells the paper. "That would confirm that, yes, . . . growth is on track."

Editor’s Note:
New Warning - Stocks on Verge of Major Collapse

Earnings season unofficially kicks off Tuesday, when aluminum producer Alcoa is scheduled to release its second-quarter results.

Analysts estimate that S&P 500 companies will show a 4.9 percent increase in earnings per share for the second quarter from the second quarter of last year, according to FactSet data cited by The Journal.

That would represent a step up from the 2.1 percent gain for the first quarter, but would trail the 8.6 percent advance of the fourth quarter. For the second half of 2014, analysts see profits rising at their strongest rate since 2011.

"If the economy is accelerating, those expectations may be reasonable," says Patrick Kaser, lead manager for two funds overseeing $6.1 billion in stocks and fixed income for Brandywine Global Investments.

So far that optimism appears justified, though analysts' predictions are often proven wrong.

"The companies that have reported second-quarter earnings to this point have given generally upbeat outlooks on the economy," Gregory Harrison, earnings analyst at Thomson Reuters, tells USA Today.

"Given the results thus far and the improved earnings guidance given by companies going into earnings season, it appears that another quarter of healthy earnings may be on the horizon."

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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Many investors have grown excited with a stock market that is routinely hitting record highs, with the Dow Jones Industrial Average topping 17,000 last Thursday.
earnings, growth, stock, rally
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2014-30-07
Monday, 07 July 2014 10:30 AM
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