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 the U.S. Dollar Index rising 9% 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. This environment is seen as conducive to stock-picking, with potential upside for companies like Axon, Cloudflare, and Walt Disney, while caution is advised for Caterpillar and Fortinet due to expected earnings pressures. As earnings reports are released, attention will be on how companies manage these currency challenges and the broader economic conditions.
The ProShares Short S&P500 ETF (SH) experienced a slight increase, rising 0.07% to $41.13 at 9:40 AM on Thursday, January 23.