As investors prepare for the upcoming earnings season, Oppenheimer chief market technician Ari Wald has issued a warning about potential seasonal headwinds that could impact market performance. According to Oppenheimer, while a bullish rotation in the market remains intact, there is risk of a seasonal correction that could push the S&P 500 toward 7,000 - nearly 8% below Friday's close. The analysis comes as investors already face multiple challenges including an unresolved U.S.-Iran war, persistent inflation concerns, and uncertainty around Federal Reserve monetary policy. As per Oppenheimer, the S&P 500 continues to consolidate below its early-June high, with mixed evidence on which direction it will break.
According to Evercore ISI analysis reported by CNBC TV18, there are four big-name stocks that could potentially start to turn around this earnings season after struggling so far this year. These stocks have been identified as part of a group that Evercore has termed 'beaten-down beat and raisers' - companies that have been beaten down in price but are expected to deliver strong earnings results that could trigger a rally. As per Evercore ISI head of equity, derivatives and quantitative strategy Julian Emanuel, upside earnings surprises should catalyze share prices higher as positioning is cautious. The note emphasizes that these stocks have struggled for different reasons even as they remain widely followed market names.
According to Oppenheimer's analysis, seasonal headwinds persist through Q3, creating a challenging environment for investors. While July historically averages a 1.3% advance for the S&P 500 going back to 1950, according to the Stock Trader's Almanac, this momentum wanes significantly in subsequent months. August sees an average rise of just 0.1%, while September ranks as the worst month of the year for the S&P 500, with the index losing an average of 0.7% in the final month of the quarter. Wald noted that any pullback would give investors a buying opportunity before seasonal factors begin improving, though he advised against blindly purchasing semiconductor stocks on dips.
As reported by CNBC TV18, Evercore ISI has identified this group of four struggling stocks as potential turnaround candidates for the upcoming earnings season. The firm's analysis suggests that these companies, despite their current underperformance, may be positioned to deliver earnings results that could attract investor attention and potentially drive a recovery in their stock prices. According to Evercore ISI, these beaten-down beat and raisers are underperforming stocks with elevated short interest and strong fundamentals that could start to do well after this earnings season. The analysis highlights that these companies combine weak recent share performance, elevated short interest and solid fundamentals that may support a rally if results beat expectations.
The outlook for the second quarter earnings season is more promising, with Evercore ISI expecting the S&P 500 to end the year at 7,750, climbing a wall of worry that includes AI disruption fears, rising oil prices, and concerns around further interest rate hikes. Evercore ISI has raised its S&P 500 2026 EPS estimate by more than 6%, to $330 from $310, citing continued AI spending and falling oil prices. The firm's 2027 earnings forecast for the S&P 500 rose by more than 8%, to $360 from $333. Despite investor concerns that fewer companies will report positive earnings surprises in Q2 compared to Q1's 15% above expectations, Evercore ISI's Stan Shipley still expects companies will beat earnings expectations by 7% in the second-quarter earnings season - double the rate before the pandemic, according to the note. FactSet projects the S&P 500 is expected to post a second straight quarter of earnings growth above 20%, with companies expected to beat earnings forecasts by 7% in the second quarter, which is double the pre-pandemic average.
