Morgan Stanley's recent report forecasts a strong earnings season for the S&P 500, with an expected 11% y/y increase in 4Q EPS and a 3% y/y sales growth. Despite a 9% rise in the U.S. Dollar Index (DXY) from September through year-end, which could pose currency headwinds, the impact is anticipated to be more significant at the individual stock level rather than the index level. Analysts suggest that the dollar's strength may lead to increased dispersion, creating a favorable environment for stock-picking. The report identifies potential upside for companies like Axon, Cloudflare, and Walt Disney, while advising caution on Caterpillar and Fortinet due to expected earnings pressures. As earnings season progresses, attention will be on how companies manage these currency challenges and the broader economic landscape.
The iShares Core S&P 500 ETF (IVV) experienced a slight decline, dropping 0.05% to $609.02 at 9:40 AM on Thursday, January 23.