Market Insight: The Fragile Profit Boom of US Corporations
Strongly growing corporate profits are seen as the mainstay of the stock market rally in the USA. But the signals are increasing that the boom could end, says Jakob Blume.
US corporate earnings have shown "exceptional strength", with a 32% year-on-year increase in Q2, according to J. Safra Sarasin strategists. However, they expect this profit boom to slow down, citing three factors: the energy price shock has subsided, financing costs are rising, and higher depreciation on investments will soon weigh on tech companies' balance sheets.
The energy sector's earnings per share surged 150% in Q2, but is expected to slow as energy prices trend downward. The strategists warn that the outlook for US corporate earnings growth looks fragile.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
