The equity market will be facing severe headwinds as expectations for earnings forecasts is likely to come down. This means more room for the stock prices to come down. In addition, investors might brace for an over-optimistic outlook for profits. With the fear of a recession, analysts are rushing to estimate the degree of impact a weaker economy and rising borrowing costs might eat on profit.
With that, future numbers might not be as rosy. In short, profit expectations should be coming down.
🍄Bang Bang Banks🌴
On Thursday, investors welcomed a piece of good news as the Fed released the latest annual test, which showed that large lenders have firm capital to shoulder a severe recession. Wall Street isn’t concerned about whether the banks would pass the test but if they will pass with a rainbow. After all, it is a pivotal catalyst to returning more capital to shareholders regarding dividends and stock buyback.
Pika World continued to hold some bank stocks.
💰Reshuffle of Russell Index💈
Yes, today is the index makeover day for FTSE Russell, which is having a reshuffle of some US stock benchmarks. Tesla, Pika World’s favourite, will be jumping over Meta Platforms to become the fifth-largest company, typically in Russell 3000 and Russell 1000. With Tesla having a higher ranking in Russell 1000, they are likely to be buying momentum on the stocks for investors mirroring the index.
Given that the Russell 1000 is a capitalisation-weighted index, one can expect Meta to be rated lower given its falling price.
Let’s see the progress today!
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All is well.