There’s More Pain Ahead for S&P 500 as Profit Warnings Loom, Investors Say

There's more pain on the way for the S&P 500 as profit warnings and fears of higher interest rates combine to threaten the key US stock indicator, according to the latest Markets Live Pulse survey.

While earnings seasons have usually been positive for equities in the past decade, according to Deutsche Bank AG strategists, the upcoming one will hurt stocks, said 55% of the 346 MLIV Pulse respondents.

The optimism of a soft landing for the economy is dissipating as stubbornly high inflation keeps central banks hawkish. Bets of higher-for-longer rates, along with grim corporate updates from FedEx Corp. to Exxon Mobil Corp. and Nike Inc., are weighing on market sentiment after strong stock gains made in the first half of the year.

Expect More Earnings Gloom | We have seen a series of profit warnings lately. Do you think:

“Negative noise from the earnings season will certainly be an element in helping slow the runaway train that is the US market,” especially if coupled with economic indicators that suggest further rate hikes ahead, said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

The biggest negative for the earnings season will be the impact of further tightening of financial conditions, said 42% of respondents. Bets remain high for the Federal Reserve to raise rates in July, after Friday’s data showed moderating payrolls, but stronger-than-expected wage growth in June.

High Interest Rates Are Hurting Stocks |