US stocks need earnings growth to regain advantage over global peers — Bloomberg

Despite the rally over the past six weeks, US stocks continue to lag behind global equity markets this year. To sustain growth and regain leadership of the country’s stock market, corporate earnings in the US need to increase again, according to analysts at Bloomberg Intelligence.

According to Bloomberg analyst Nathaniel Welnhofer, the slowdown in earnings growth among American companies has significantly affected the S&P 500’s performance, weakening the index’s position among global markets.

In 2024, US corporate earnings growth outperformed other developed markets by 13%. However, by now, this figure has fallen to 9%. The introduction of new duties by the United States could exacerbate the situation and affect corporate earnings, the agency said. In view of these events, many executives have noted an increase in production costs, deteriorating consumer sentiment, and low business confidence.

Despite the recent 19% increase in the S&P 500 Index since April 8, some Wall Street analysts have expressed concern in their future forecasts. Nevertheless, the S&P 500 is currently trading at 22 times projected earnings for the next 12 months, 19% above its long-term average.