Bob Doll: Inventory Market Upside Possible Restricted

U.S. inventory market upside seems restricted, and valuations could also be in danger, Crossmark International Investments Chief Funding Officer Bob Doll mentioned Monday, noting that corporations will possible face a problem in assembly earnings expectations for subsequent 12 months.

Equities are up 16% 12 months thus far, totally on price-to-earnings growth, “whereas actual charges and price of capital are shifting deeper into restrictive territory,” Doll famous in his weekly Doll’s Deliberations e-newsletter.

“Historical past suggests this relationship is changing into more and more unsustainable, posing danger to the fairness a number of, particularly since earnings expectations already face a excessive hurdle for 2024,” he mentioned.

The 15 greatest S&P 500 corporations are up 41%, whereas the median firm is up solely 3%, Doll mentioned.

Crossmark stays involved about companies’ capacity to satisfy “outsized” 2024 earnings progress expectations within the subsequent 12 months, the CIO wrote, noting estimates name for 12% progress within the S&P 500. August was the primary month since March 2022 that the three-month common of S&P upward earnings estimate revisions as a share of whole revisions exceeded 50%, he famous.

“Though international company earnings proceed to grind larger, fairness markets stay hostage to the whims of the bond market, leading to a uneven stop-start backdrop,” Doll wrote.


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