BofA strategists said that results so far are the worst since the beginning of the pandemi
WASHINGTON: Wage pressures are the biggest risk to the United States corporate profitability, Bank of America Corp (BofA) strategists say, as they doubled down on their longstanding warning that the period of explosive earnings growth is coming to an end.
“Negative guidance and estimate cuts are likely in the offing,” the strategists led by Savita Subramanian wrote in a note to clients. They forecast that earnings-per-share for S&P 500 companies will beat estimates by 3% for the fourth quarter, “but see downside risks to full-year 2022.”
While the earnings season has barely started, market reaction to the profits reported by some of Wall Street’s biggest names was muted at best, with Goldman Sachs Group Inc shares tanking on Tuesday, as trading revenue disappointed investors.
Stock bulls, such as JPMorgan Chase & Co, expect earnings to restore confidence in the equity rally, after a rout triggered by concerns over rising rates and a deteriorating macroeconomic outlook.
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