The stock market is in full swing, entering the first quarter profit season.
A formidable rally has propelled the S&P 500 up 9.9% this year to 20 record closures, keeping stock valuations at record highs. Some investors, however, say the shares could have more room for maneuver as the launch of Covid-19 vaccines and heavy government spending bolster corporate earnings prospects.
The earnings season begins in earnest this week, with results from major US banks – including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co – and companies from Delta Air Lines Inc. the PepsiCo Inc. and UnitedHealth Group Inc.
Investors will be alert to signs of confidence from directors that customer demand will continue to grow and rising costs can be managed to ease their concern that stocks seem expensive.
The S&P 500 traded 22.6 times its forecast earnings over the next 12 months on Thursday, above the five-year average of 18.14, according to FactSet. Paying payments, even for the shares of high-quality companies, increases the prospect of reducing the future profitability of shareholders.