The S&P 500 is poised for significant gains in Q4 2023, historically the strongest quarter, rising 80% of the time. Seasonally, October typically marks a bottom with a 60% rise following, while November and December are expected to perform well, culminating in the well-known Santa Claus Rally.
In Q2 2023, S&P 500 earnings growth exceeded 50%, with reports indicating a potential outperformance of the mid-August consensus of 27.5% for the current quarter. Factors such as high oil prices have led to substantial year-over-year earnings growth in energy companies, with Exxon Mobil reporting around 150% growth, while NVIDIA reported a remarkable 140% earnings-per-share growth.
The Federal Open Market Committee (FOMC) is expected to maintain current interest rates despite inflation pressures driven by high energy prices. Overall market resilience is supported by stable labor markets and expected improvements in market breadth as the season shifts into fall.
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