Longest in Five Years! US Stock Earnings Upward Revision Trend Hits Record Since 2021, May Signal Another Profitable Earnings Season Ahead

According to Golden Ten Data, supported by robust corporate earnings prospects, US stocks are showing strong resilience, withstanding the impact of rising inflationary pressures. A Citigroup index shows that in the past 21 weeks, the number of analysts raising earnings expectations for US companies has continuously outnumbered those lowering them, marking the longest streak of upward revisions since September 2021.

This trend paves the way for another stellar earnings season for US companies—coming right after one of the strongest quarters on record for US stocks. Meanwhile, with WTI crude oil prices firmly above $90 per barrel and traders widely expecting the Federal Reserve to raise rates next week, this wave of earnings upgrades has also effectively boosted market sentiment.

Although the rally in US stocks has slowed somewhat over the past month, the S&P 500 Index is still only about 1% below its all-time high.

Marija Veitmane, Head of Equity Research at State Street Global Markets, said: “What drives the stock market is micro fundamentals, not macro factors. I continue to see strong earnings upgrades boosting investor interest in equities, and I don’t view this as mania or a case of 'burying one’s head in the sand.'”

Keith Parker, Global Head of Macroequity Strategy at UBS, noted that in the past two months alone, market expectations for S&P 500 earnings next year have been revised up by nearly 4%. “This is extremely rare and fully reflects the broad-based resilience of recent US corporate earnings across multiple sectors.”

Recently, the bond market has once again become a core variable determining the direction of equities. Typically, rising yields increase financing costs and lower the present value of future earnings, thereby putting pressure on stocks. However, this round of yield increases has been accompanied by strengthening expectations for economic growth, suggesting the stock market is able to absorb the impact of higher interest rates.

Some market participants are even more optimistic about the upside potential driven by the artificial intelligence (AI) boom. For instance, Willem Sels, Global Chief Investment Officer at HSBC Private Bank, commented that current US stock valuations still do not fully reflect the potential scale of productivity gains brought about by AI.