S&P 500 Record-Profit Outlook Is Too Optimistic, Survey Shows

Investors anticipating blockbuster profits in 2024 will be disappointed, according to Bloomberg’s latest Markets Live Pulse survey.

The consensus estimate of sell-side analysts is that S&P 500 earnings this year will reach historic levels, but those forecasts are too high, according to 50% of 380 MLIV Pulse respondents. The poll shows an economic slowdown is the biggest risk for the bottom lines this year.

Too High Earnings Expectations Face Reality Check

The findings imply profits won’t be a key catalyst for stock market gains this year after a 24% rally in the S&P 500 in 2023. While corporate earnings held up better-than-estimated last year, helping boost stock valuations, the key US index snapped a nine-week gaining streak in the first week of January.

“Investors have priced significant expectations of a benign soft-landing scenario for 2024,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management SA. “I am more cautious.”

JPMorgan Chase & Co. strategists said forecasts for the S&P 500 2024 earnings-per-share are at risk of downgrades. "Profit margins are softening," a team led by Mislav Matejka wrote in a note on Monday. "Corporate pricing power is likely to weaken from here."