It has been said that bull markets don’t die of old age. That’s good news for investors in the current stock market, which is the longest running bull market since the 1950s.
Dozens of companies from Bank of America to Whirlpool will release their latest quarterly financial results in the week ahead. Shareholders are confident that corporate earnings will continue fueling optimism of future gains. The S&P 500 stock index is hovering near new highs while earnings for the companies in the index are projected to jump by 6.5 percent compared to a year ago, according to FactSet.
But in an efficient market those profits are priced in.
Instead, the aging bull market is buying expectations that earnings growth will speed up throughout the rest of the year. Analysts anticipate earnings will grow over 7 percent this quarter and over 12 percent in the fourth quarter.
Those rosy projections will be in focus as the bulk of the second quarter earnings season begins. Stodgy sectors like energy and materials should lead the charge with technology businesses helping, too.
Strong profit growth will trump any of the doings of President Donald Trump, Brexit concerns or worries about North Korea. While any of those (and plenty other) uncertainties can fracture investor confidence, it’s the promise of profit that matters to the market.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.