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Business execs appear bullish

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More U.S. executives than ever are increasing earnings forecasts compared with those lowering them, helped by almost $2 trillion of Federal Reserve spending and a recovery in the global economy, Bloomberg reported.
 
EBay Inc., United Parcel Service Inc. and 196 other companies raised profit estimates above analysts’ projections last month as 130 firms cut them, the biggest gap since Bloomberg began tracking the data in 1999. Shipping companies and computer makers boosted forecasts the most, pushing the Morgan Stanley Cyclical Index of businesses most tied to the overall economy up 27 percent since July 2. That beat the 20 percent rally in the Standard & Poor’s 500 index.

Companies are raising their profit outlook at the same time the Federal Reserve is trying to prevent deflation and reduce unemployment by purchasing an additional $600 billion in U.S. Treasury securities. The last time executives were this optimistic, stocks climbed 39 percent during the next 3 1/2 years, data compiled by Bloomberg show.

“It’s important for the rally and for the general health of the market that investors continue to anticipate higher earnings,” said Dean Gulis, who manages $3 billion for Loomis Sayles & Co. in Bloomfield Hills, Mich. “That companies themselves are expecting better profits is very positive. As we see rising earnings, we’ll see improving stock prices.”

Click here to read the entire Bloomberg story.

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