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Earnings estimates are flatlining. This strategist says stop buying stocks. - MarketWatch

1. Truist downgrades global equities to neutral. S&P 500 bull market momentum slows. 2. Forward S&P 500 earnings flatlined last month. Index trades near high valuation. 3. Only 52% of stocks are above the 50-day MA; 58% exceed the 200-day MA. 4. Softer US economic data and tariff ambiguity raise uncertainty. Mixed outlook persists. 5. Small-cap stocks downgraded and cash shifted to neutral amid near-term risks.

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FAQ

Why Bearish?

The advisory note highlights stagnating earnings estimates and weakening market breadth, suggesting fading bullish momentum. Historically, similar signals have preceded short-term pullbacks when high valuations meet economic uncertainties.

How important is it?

The advisory's downgrade reflects shifting market dynamics that could alter investor behavior. While significant, the cautionary tone and mixed signals imply a moderate impact on the S&P 500 price.

Why Short Term?

Near-term uncertainties such as tariff ambiguity, weaker economic data, and potential event risks (debt-ceiling debate) indicate a short-term impact. Past episodes, like brief corrections in uncertain economic climates, support this view.

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