Globe editors have posted this research report with permission of S&P Capital IQ. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:
Judging by the S&P 500's 24-per-cent year-to-date gain in 2013, investors appear to be expecting even better news on the economy and profitability in the year ahead. This is clearly illustrated in 2014's consensus earnings expectations, which currently stand at $121.24 (U.S.) according to S&P Capital IQ's bottoms-up survey of Wall Street analysts.
So, the issue we need to be pondering now is will U.S. and global economic growth be strong enough to generate profits of that magnitude in the coming year? S&P 500 earnings may not need to hit or exceed $121 per share to fulfill bullish expectations, but they will have to be good enough to perpetuate the notion that economic fundamentals can continue to improve for the foreseeable future.
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