Amid strong consumer demand and a resilient U. S. economy, only a small number of large companies have negative earnings this year. In 2024, S&P 500 firms are expected to experience 9. 5% annual earnings growth, exceeding the 10-year average. Corporate profits have increased nearly 70% since 2020, driven mainly by major tech companies investing in AI technologies. However, profitability among small and mid-cap companies is less widespread due to greater risks.
The graphic by Visual Capitalist shows the percentage of companies with negative earnings in the U. S. markets. While most S&P 500 companies are predicted to report positive earnings, growth is largely fueled by a few tech giants, particularly the "Magnificent Seven," which is expected to account for 62% of earnings growth, with Nvidia alone representing 13%. The trend is anticipated to persist, albeit at a slower rate due to competition and rising costs.
For mid-cap companies, about 14% have negative earnings due to higher debt. Small-cap stocks, represented by the Russell 2000, show a high rate of unprofitability at 42%, significantly up from 14% two decades ago. Despite their struggles, increased investor risk appetite might lead to recovery.
https://www.zerohedge.com/markets/zombified-42-us-small-caps-still-have-negative-earnings
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