Starting this week, earnings may give the stock market a major boost.
Lindsey Bell of Ally Invest found that it is undeniable that the third quarter was Wall Street’s strongest earnings season.
“We started thinking about the end of this year to next year, and you started to hear the corporate management team talk about this,” the company’s chief investment strategist told CNBC’s “Trade Nation” on Monday. “This makes investors excited about what is about to happen.”
Bell highlighted the bullish trend in a special chart. It shows the average change in the S&P 500 index since 2000 for each earnings season.
According to the data, the index rose by 2.5% from mid-October to late November, which is in line with the third quarter earnings. The second and fourth quarter earnings quarters fell by an average of 0.3%.
Bell expects this model to continue.
CNBC contributor Bell said: “This is the first of four quarters. We actually saw a slight decline in earnings expectations during the reporting period.” “At the same time, we also saw the market in the reporting period. Down. We haven’t seen this for four or five quarters. So, this setting looks good for stocks.”
However, there is inflation on her watch list as a potential headwind.
“It all comes down to comments on profit margins and pricing power,” Bell added. “The performance will be one-off. And it will really benefit high-quality companies that can handle higher costs and pass pricing power to consumers.”