As the first-quarter earnings season approaches its conclusion, results have surpassed analyst expectations, with numerous companies delivering impressive beats. To provide insight into the market outlook amidst this ongoing earnings season, Citi’s Head of US Equity Strategy Scott Chronert joins Catalysts.
Chronert reveals that "the bigger picture" he’s focusing on from the first-quarter earnings is acceleration. He notes that this acceleration creates cash flow, freeing up "a lot of financial responsibility," which explains the uptick in share buyback programs enacted by companies.
Casting a broader view on the first-quarter earnings season, Chronert acknowledges that "it’s not uncommon to see expectations come down." However, he points out that this dynamic often leads to positive surprises from companies, which he deems "nearly a given." Furthermore, since the consensus for the full-year target for the S&P 500 (^GSPC) hasn’t changed, Chronert explains this dynamic as a "beat and hold" scenario, creating "ongoing fundamental tailwinds to support US equities."
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