Bloomberg previews third-quarter earnings.
As third-quarter earnings season begins, the companies analysts are most bullish about are the ones whose stock prices are farthest below their highs — banks.
While financial institutions in the Standard & Poor’s 500 Index climbed 24 percent in 2012 for the biggest rally in nine years, they remain 58 percent below the record of February 2007, according to data compiled by Bloomberg. Signs of a housing recovery prompted Wall Street firms to raise estimates for profit growth to 21 percent for the third quarter and 32 percent in the fourth, the most of 10 S&P 500 industries. [Emph. added.]
So the financials are down by the most and yet have the strongest near-term earnings growth outlook. There’s a message in there somewhere. I wonder what it could be. . . .