Data compiled by Bloomberg show that companies in the S&P 500 Index, on a scale of 1 to 5 with 5 being a buy and 1 being a sell, have an average consensus rating of 4. That’s the highest reading since 2002.
US stocks rebounded last week, gaining around 6.5% in their second-best reading of the year. “This is a classical bear-market rally,” Shalett said. “If you look at things, one of the narratives of bear markets is that you actually have to eliminate the vast majority of negative catalysts and the single biggest one that’s still out there is a recalibration of earnings expectations.”
To be sure, tech analysts have been quietly cutting their 2022 and 2023 earnings estimates over the last 30 days -- a trend Nicholas Colas, co-founder of DataTrek Research, found unsurprising.
“The Street is too high again in 2022, but what really matters is current valuations,” he wrote. “We do, however, wonder if that portends further downside revisions once we see Q2 earnings announcements.”
--With assistance from Jonathan Ferro and Lu Wang.
This article was provided by Bloomberg News.