The Tell: ‘Not a time to buy’: S&P 500 exiting ‘best era’ in decades for earnings growth amid ‘dried up’ liquidity

by | Feb 21, 2023 | Stock Market

The U.S. stock market, as measured by the S&P 500 index, appears to be exiting the “best era” for growth in earnings per share in decades as sources of liquidity have dried up, according to research from Bank of America.  The S&P 500’s earnings per share are “more cyclically peaked than ever from low financing costs, buyback-fueled growth and peak stimulus,” equity and quantitative strategists led by Savita Subramanian said in a BofA Global Research note Tuesday. “Secular EPS growth is at a multidecade high.” 

BofA, which has forecast the S&P 500
will see $200 in earnings per share in 2023, says “now is not a time to buy the (crowded) market index.” But the strategists said that “shifts in liquidity should drive opportunities within, and outside of, the index.” “We may be exiting the best S&P EPS era, but we are likely entering the best stock pickers market in our careers,” they said. “We recommend being invested in equities but selectively.” The strategists shifted their view of the materials sector to overweight from underweight, while moving utilities down to market weight from overweight. They also moved communication services up to market weight, from underweight, as Facebook parent Meta Platforms Inc.’s …

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