The stock market boom could fuel even more of a rush.
“We are in the early stages of a bull market, where the earnings recovery story has barely begun,” Ben Laidler, head of equity strategy at Bradesco BBI, told Yahoo Finance editor-in-chief Brian Sozzi on the Opening Bid podcast (video above; listen here).
Laidler, who has worked at HSBC and JPMorgan, among others, thinks there is a good chance the Fed will cut rates twice this year, which should further boost investor enthusiasm, along with strong earnings growth expectations.
According to Laidler, these factors could drive share prices up by at least 100% over the next five years.
“Earnings could easily grow 15% a year if the economy keeps going and there’s a bit of multiple expansion, which I think would be justified by lower interest rates,” he said.
The current bull market for stocks is expected to begin in October 2022, when the S&P 500 (^GSPC) hit its most recent low. Since then, the index has risen as much as 55%.
The gains are due to the enthusiasm surrounding AI, which has seen names like Nvidia (NVDA) and Apple (AAPL) reach record highs.
This year, momentum has pushed the Dow Jones Industrial Average (^DJI) above 40,000 and the S&P 500 above 5,000.
The S&P 500 has managed to rally 15.3% through the first half of 2024, the 16th strongest start to a year since 1950, according to data from Truist chief markets strategist Keith Lerner. The S&P 500 has now risen in seven of the past eight months.
Part of Laidler’s thesis will be tested in the coming earnings season, which begins with results from banks like JPMorgan (JPM) and Wells Fargo (WFC).
FactSet estimates second-quarter earnings growth for S&P 500 companies at 8.8%. If achieved, it would be the fastest year-over-year growth since the first quarter of 2022. It would also be the index’s fourth straight quarter of year-over-year earnings growth.
Double-digit profit growth is expected in the Communication Services (18.5%) and Information Technology (16.1%) sectors.
“We are in a very fundamentally supported market. Earnings are recovering and rate cuts are coming,” Laidler added.
The outlook for AI stocks still looks good despite big gains, Goldman Sachs portfolio manager Brook Dane said on Opening Bid. Listen below.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi hosts insightful, market-focused conversations and chats with the biggest names in business on Opening Bid. Find more episodes on our video hub . Watch on your favorite streaming service. Or listen and subscribe on Apple Podcasts, Spotify or wherever you find your favorite podcasts.
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