Strong economic growth in the US has weakened fears of a recession and made it more likely that the Fed will cut interest rates in November, writes Fingal Tuesday.
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Ed Yardeni, principal analyst at Yardeni Research, points to a much more accurate indicator: earnings per share (EPS) expectations for the S&P 500. at record levels.
This means an increase of at least 40 percent from the current level.
– We have often seen that this indicator does not indicate a recession (that is our work), but it is a very good indicator of earnings per share when the economy is growing, writes Research Yardeni in a note.
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Yardeni believes that we should focus more on what companies can earn in the future, instead of relying on the standard indicators.
Yardeni emphasizes that strong employment growth, high wage growth and a drop in unemployment give cause for hope. Although the US central bank (Federal Reserve, Fed) has cut interest rates, there is now uncertainty as to whether they will continue to do so.
2024-10-08 18:48:00
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