The simplest explanation for why stocks are up 📈
Earnings forecast revisions are all moving favorably 📈
As of Friday afternoon, the S&P 500 was up 11.4% in 2023, and the index has spent most of this period higher than where it started the year. It’s now up 19.5% from its October 12 closing low of 3,577.03.
So what’s going on?
Well, it’s been about three months since the emergence of banking turmoil, and yet there’s little sign of it morphing into a major systemic headwind to the economy. And we also just got a resolution to the debt ceiling, which frankly was almost certainly getting resolved from the get go.
The receding uncertainty arguably justifies higher prices.
But I’ll offer a simpler and more powerful explanation: The outlook for earnings is improving. And as we often say at TKer, earnings are the most important driver of stock prices.1
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