Latest news with #CharlieBilello
Yahoo
5 days ago
- Business
- Yahoo
The V-shaped recovery in stocks is a V-shaped recovery in earnings: Chart of the Week
The S&P 500 (^GSPC) notched five record highs in as many trading days last week, capping off what's now a 28% rally since reaching this year's lows on April 8. This V-shaped recovery in the benchmark index marks the second-fastest rebound from a drawdown of at least 19% in the last 75 years, according to data from Creative Planning's chief strategist Charlie Bilello. A massive move in the index from a low of 4,987 to Friday's closing price of 6,389 has formed a large V shape in the S&P 500 2025 chart. Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy And though questions may linger for some as to what, exactly, is driving the market higher, the V-shaped recovery in earnings expectations that has accompanied this rebound in the market makes this rally make a whole lot more sense. Data from Morgan Stanley's chief investment officer Mike Wilson shows that earnings revisions breadth — or the ratio of companies raising forecasts to those cutting forecasts — has rebounded as dramatically as, and in lockstep with, the S&P 500 itself. "Many market participants do not appreciate how strong this very fundamental driver has been over the past several months," Wilson told Yahoo Finance. After tanking as analysts assessed the impact of President Trump's initial "Liberation Day" tariffs, earnings revisions have been soaring. And early returns this earnings period have backed up this optimism. With 34% of the S&P 500 having reported results, earnings in the second quarter are on pace to grow 6.4%, up from the 5% expected on June 27, per FactSet data. Estimates for year-over-year earnings growth in the final two quarters of 2025 and for the full year 2026 have been moving higher. As of July 25, FactSet data showed analysts expect the S&P 500 to grow earnings by 13.9% in 2026, up from the 13.8% that had been expected a month ago. Wilson notes these revisions lead actual earnings estimates and that the current recovery in the outlook is rivaled only by the pandemic-era rebound. That period, Wilson adds, is "the last time we were so out of consensus on the market." The rebound in earnings revisions "helps to not only justify the rally to date, but also why we remain bullish on the next six to 12 months," Wilson added. "We are currently experiencing one of the strongest V-shaped recoveries in history, rivaling the COVID rebound in 2020, the last time we were so out of consensus on the market," Morgan Stanley's chief investment officer told Yahoo Finance. Wilson's chart is one of several in Yahoo Finance's upcoming Chartbook, which will be published Tuesday morning, that help explain why the S&P 500 has roared back to all-time highs despite persistent fears Trump's tariffs could derail earnings growth. Recent signs of feverish speculation in the market, notably the meme stock resurgence, could be a reason for caution. And valuations have also been on the rise — the S&P 500 is now valued at 22.4 times next year's earnings, above the five- and 10-year averages of 19.9 and 18.4. But the simple fact is that, to this point, tariffs haven't had the broad impact on corporate earnings and the US economy that many had feared. And what's more, arguably the most important driver of stock prices is again on the rise. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
The V-shaped recovery in stocks is a V-shaped recovery in earnings: Chart of the Week
The S&P 500 (^GSPC) notched five record highs in as many trading days last week, capping off what's now a 28% rally since reaching this year's lows on April 8. This V-shaped recovery in the benchmark index marks the second-fastest rebound from a drawdown of at least 19% in the last 75 years, according to data from Creative Planning's chief strategist Charlie Bilello. A massive move in the index from a low of 4,987 to Friday's closing price of 6,389 has formed a large V shape in the S&P 500 2025 chart. Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy And though questions may linger for some as to what, exactly, is driving the market higher, the V-shaped recovery in earnings expectations that has accompanied this rebound in the market makes this rally make a whole lot more sense. Data from Morgan Stanley's chief investment officer Mike Wilson shows that earnings revisions breadth — or the ratio of companies raising forecasts to those cutting forecasts — has rebounded as dramatically as, and in lockstep with, the S&P 500 itself. "Many market participants do not appreciate how strong this very fundamental driver has been over the past several months," Wilson told Yahoo Finance. After tanking as analysts assessed the impact of President Trump's initial "Liberation Day" tariffs, earnings revisions have been soaring. And early returns this earnings period have backed up this optimism. With 34% of the S&P 500 having reported results, earnings in the second quarter are on pace to grow 6.4%, up from the 5% expected on June 27, per FactSet data. Estimates for year-over-year earnings growth in the final two quarters of 2025 and for the full year 2026 have been moving higher. As of July 25, FactSet data showed analysts expect the S&P 500 to grow earnings by 13.9% in 2026, up from the 13.8% that had been expected a month ago. Wilson notes these revisions lead actual earnings estimates and that the current recovery in the outlook is rivaled only by the pandemic-era rebound. That period, Wilson adds, is "the last time we were so out of consensus on the market." The rebound in earnings revisions "helps to not only justify the rally to date, but also why we remain bullish on the next six to 12 months," Wilson added. "We are currently experiencing one of the strongest V-shaped recoveries in history, rivaling the COVID rebound in 2020, the last time we were so out of consensus on the market," Morgan Stanley's chief investment officer told Yahoo Finance. Wilson's chart is one of several in Yahoo Finance's upcoming Chartbook, which will be published Tuesday morning, that help explain why the S&P 500 has roared back to all-time highs despite persistent fears Trump's tariffs could derail earnings growth. Recent signs of feverish speculation in the market, notably the meme stock resurgence, could be a reason for caution. And valuations have also been on the rise — the S&P 500 is now valued at 22.4 times next year's earnings, above the five- and 10-year averages of 19.9 and 18.4. But the simple fact is that, to this point, tariffs haven't had the broad impact on corporate earnings and the US economy that many had feared. And what's more, arguably the most important driver of stock prices is again on the rise. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Click here for in-depth analysis of the latest stock market news and events moving stock prices
Yahoo
19-04-2025
- Business
- Yahoo
These are the big winners as the US dollar weakens
The dollar has slumped against other currencies as President Donald Trump's tariffs pinch demand. Haven currencies, export-driven economies, and commodities stand to gain from its decline. Here are some of the likely winners from a weaker greenback. The US dollar, the bedrock of global finance, has weakened by nearly 10% from its mid-January peak to a three-year low against a basket of major currencies. A key catalyst has been President Donald Trump's disruptive tariffs, which have reignited inflation and recession fears and rocked investors' confidence in the greenback. The buck's depreciation has eroded consumers' purchasing power and raised import costs for businesses, while also making US exports more competitive. The slump also has global implications, as the dollar is the world's reserve currency used for trading everything from goods and services to commodities and derivatives. Here's a look at the likely winners from the decline. The dollar's loss has been other currencies' gain this year, as investors seek havens and substitutes. The Swiss franc, supported by Switzerland's neutrality and robust financial system, has gained more than 9% against the dollar and continues to hover around its strongest level in more than a decade. The yen, underpinned by Japan's low inflation and strong bond demand, has surged more than 9% versus the greenback. The euro has surged to a three-year high against the dollar, signaling confidence in the European Central Bank. Emerging market currencies such as the Singapore dollar and South Korean won have also gained ground. While cryptocurrencies are heralded as hedges against inflation and currency depreciation, bitcoin is down more than 9% at about $84,400. Charlie Bilello, the chief market strategist at wealth manager Creative Planning, highlighted the broad exodus from the dollar this year in a X post on Wednesday: A weaker dollar typically benefits export-driven economies such as China, Germany, Japan, and Malaysia. It makes the goods they produce cheaper in dollar terms, boosting domestic companies' revenues and profits and lifting their stock prices. That effect is at least partly offset by Trump imposing tariffs on most goods entering the US. Commodity-rich countries such as Saudi Arabia and Australia tend to gain too, as their respective oil and gold exports become more competitively priced. Other countries' stock markets stand to gain as well as more investors pile in, seeking better returns on their money. A declining dollar could accelerate efforts by countries including Brazil, India, Russia, China, and South Africa to reduce dollar dominance in global trade — a trend known as de-dollarization. Oil, gold, and agricultural goods tend to benefit from a falling dollar as it makes them relatively cheaper. Gold, a popular haven asset, has surged above $3,300 an ounce this year as investors flee from riskier assets such as US stocks and dollars. However, crude prices have dropped since January due to concerns that an expanding trade war will trigger a global economic slowdown and reduce oil demand. Soybean futures are up about 4% this year at $10.40 a bushel, as tighter supply and Chinese tariffs on US soybeans put upward pressure on prices. Read the original article on Business Insider Sign in to access your portfolio
Yahoo
19-04-2025
- Business
- Yahoo
A Stock Market Indicator Rarely Seen Since 1990 Hints at a Monster Rally. Here's What Investors Should Know.
The S&P 500 (SNPINDEX: ^GSPC) is currently 14% below the record high it reached earlier this year. The decline started when President Donald Trump announced tariffs on goods from China, Canada, and Mexico in February, and the losses deepened as he added new duties on steel, aluminum, and auto imports. However, it was the 10% universal tariff and country-specific reciprocal tariffs unveiled on April 2 that truly caused the stock market to crash. The S&P 500 tumbled 12% during the next five trading days as Wall Street processed the radical shift in U.S. trade policy. Many analysts stunned by the severity of the tariffs raised their recession risk forecasts. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Stock market volatility peaked when the CBOE Volatility Index (VOLATILITYINDICES: ^VIX) reached 52.3 on April 8, one of the highest readings since January 1990. But similar readings have usually been great news for investors. The S&P 500 has usually generated monster 12-month returns following VIX readings above 50. The CBOE Volatility Index (VIX) uses prices from S&P 500 options contracts to measure expected volatility in the stock market over the next 30 days. The VIX is frequently called the fear gauge by financial media because volatility often coincides with panic selling. Put differently, the VIX and the S&P 500 generally move in opposite directions. Higher readings indicate more volatility, while lower readings indicate less volatility. Since 1990, the VIX has recorded an average closing value of 19.5, though its closing values have ranged between 9.1 and 82.7. As mentioned, the VIX closed at 52.3 on April 8, signaling high volatility. But the S&P 500 has typically generated monster returns during the year following such high readings. Since 1990, the VIX has closed above 50 on only 75 trading days, far less than 1% of the time. Importantly, the S&P 500 always increased during the next one, three, and five years, according to strategist Charlie Bilello. Put differently, VIX readings above 50 have a perfect track record for predicting upside in the stock market. The average return during those periods is listed below: One-year return: 35% Three-year return: 55% Five-year return: 129% Interestingly, VIX readings above 50 also correlate with economic downturns. Each time the index has closed above 50 since 1990, the U.S. economy has been in a recession. That does not necessarily mean we are in a recession today, but it is certainly possible. Indeed, BlackRock CEO Larry Fink recently told CNBC, "I think we're very close, if not in a recession now." Here is the bottom line: The S&P 500 closed at 4,983 on April 8, the day the VIX recorded a closing value of 52.3. The S&P 500 will climb 35% to 6,727 by April 2026 if its performance matches the historical average. That implies 27% upside from the current level of 5,283. Investors should bear in mind that past performance is never a guarantee of future results. President Trump paused his most aggressive tariffs for 90 days, but tariffs already imposed by the administration have still raised the average tax on U.S. imports to 28%, according to the Budget Lab at Yale. That is the highest level since 1901. Predicting the outcome of the current situation is challenging because there is little historical precedent. With the average import tax at its highest level in over 100 years, many economists expect tariffs to slow GDP growth and raise prices, a condition known as stagflation. In total, the Budget Lab at Yale estimates tariffs will cost the average American household $4,900 per year. Here is the bottom line: History says the S&P 500 could stage a monster rally in the next year. However, tariffs imposed by the Trump administration could have a devastating impact on the U.S. economy. Investors can reconcile those opposing viewpoints with cautious optimism. Tariffs could be much lower than advertised by the Trump administration. So, it makes sense to put money into the stock market at a measured pace today. But investors should stick to their highest-conviction stocks and be prepared to hold through further declines. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $524,747!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $622,041!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 153% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 14, 2025 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. A Stock Market Indicator Rarely Seen Since 1990 Hints at a Monster Rally. Here's What Investors Should Know. was originally published by The Motley Fool
Yahoo
08-04-2025
- Business
- Yahoo
One chart shows how much optimism has been wiped out of the 'Magnificent 7' because of Trump tariffs
The premiums afforded once untouchable "Magnificent Seven" stocks continue to evaporate as Trump tariff concerns pound global markets. Price-to-earnings ratios — which measure how much an investor is willing to pay for the company's future earnings — for the Magnificent Seven have plunged across the board, according to new data from Creative Planning chief markets strategist Charlie Bilello (see chart below). The Magnificent Seven includes Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). The most significant multiple compression has come from Tesla, Nvidia, and Apple — three companies stuck in the crosshairs of Trump's bruising new trade policies. Apple shares alone have shed 13% in the past five trading sessions, or about $368 billion in market cap. Experts say that the P/E pullbacks reflect uncertainty about what future earnings will be for even the formidable Magnificent Seven, which are often heralded for their wide-moat business models and impressive cash piles. "What is the E [earnings]? No one knows in this economic chaos policy," Wedbush tech analyst Dan Ives told Yahoo Finance about the Magnificent Seven valuations. The market is trying to figure out fair value but is crying out loud in the process. Heavy selling continued in markets around the world on Monday. Tokyo's Nikkei 225 (^N225) index tanked 7.8%. Hong Kong's stock market (^HSI) nosedived about 12%, the worst day in more than 16 years. China's Shanghai Composite Index ( lost 8.4%. Futures on the Dow Jones Industrial Average (^DJI) dropped more than 1,100 points at one point. S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) futures were each down about 3.5%. Markets have shed an astounding $5.4 trillion in value in the two days since President Trump revealed big-time tariffs on major companies. The S&P 500 is now at its lowest level in 11 months. Read more: How to protect your money during economic turmoil, stock market volatility The impact of tariffs on Magnificent Seven players may be sizable. Amazon could see a $5 billion to $10 billion annualized operating profit hit from higher first-party merchandise costs due to tariffs, Goldman Sachs tech analyst Eric Sheridan warned in a new note. Assuming no mitigating factors such as cost cuts or vendor negotiations, Sheridan estimated that Amazon's US merchandise costs would soar by 15% to 20%. "We don't think this [selling] was it yet though. Last week's tariff announcement has dialed up uncertainty even further," HSBC strategist Charlotte Parker said on Monday. Parker added, "What will drive the next — and perhaps final — leg lower? Quite simple: definitive signs of deteriorating fundamentals. Long-only investors aren't sufficiently prepared for this and most still seem to be clinging on to the 'it's just a slowdown' narrative. Once we see the first hard data surprise negatively and/or US companies start to cut their guidance in the Q1 reporting season, we think the near-term bounce would be very short-lived." Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email Sign in to access your portfolio
