George Seay, Founder And Chairman, Annandale Capital, explains why second quarter earnings season could be pivotal for the stock market.
Transcript:
CAROLINE WOODS: I also want to ask you about earnings season because that’s kicking off. What are you expecting? And could that be a positive or negative catalyst for the market do you think?
GEORGE SEAY: It definitely could be a positive catalyst for the market. If earnings outperform to a degree the market wants, it’s usually earnings. Expectations are exceeded about 70% of the time. And reported earnings companies obviously lowball and try to have the market outperform what the market’s formal expectations are. But they’ve got to outperform by enough for the stock to continue to go up because the stocks have already gone up in anticipation of that. So I think earnings season will have a very dramatic impact on whether we have a very soggy fall or if the market continues to March up and to the right. I saw one firm came out today with a new price target by end of the year for the market of 7,000 on the S&P 500 index, which would be another 12% up from even where it’s been this year, which would give us 3 straight years of 20% returns in the market. I don’t find that Super likely, but there’s still quite a bit of optimism out there, even though the market’s rallied as much as it has. So I think this earnings season is going to be very important throughout the rest of the year.
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