Earnings expectations for US stocks show the fastest growth since the pandemic, institutions warn of "overheating" risks

Jinse Finance reported that on July 3, as the S&P 500 Index and Nasdaq Composite Index have recently reached new record highs, the US stock market is in the midst of a frenzy driven by earnings expectations. However, behind the strengthening indices, the rapid pace at which Wall Street analysts have raised corporate profit forecasts has sparked deep concerns within the industry about an “earnings bubble.” The latest data shows that analysts currently expect the profits of S&P 500 Index constituent companies to grow by 25% over the next year. The speed at which this optimism has expanded is staggering—over the past six months, consensus forecasts for forward earnings have been revised up by nearly 20% in total, representing a rebound in strength not seen since the economy’s revenge recovery from the pandemic shock in 2021.GMO asset allocation co-head Ben Inker pointed out that current profit forecasts are in a “very unconventional” growth pattern. He warned that the market will eventually realize that these overly optimistic predictions cannot be converted into reality, and at that point an adjustment will be unavoidable.