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The S&P 500 earnings are expected to rise 17.7% on the year from the epidemic hit; Recovery may occur in these areas

Recovery may once again be due to financials, followed by material. (Picture: REUTERS)

Wall Street listed companies are poised to rebound strongly after a sharp 14.7% drop in earnings in the first quarter of 2020. Analysts at Wells Fargo estimate that the S&P 500 earnings for the January-March quarter of 2021 will grow by a massive 7.7%. Helped by a low base. Meanwhile, sectors such as financial and materials, among the hardest hit during the epidemic, are expected to lead the recovery. Krishna Gandikota, investment strategy analyst at Wells Fargo, said, “From a historical perspective, consensus estimates are expected to be higher than expected earnings.

After the financial crisis of 2009, the S&P 500 Index saw a huge growth of 6.5% in the first quarter of 2010, which was at the market low in 2009. Similarly, after a sharp decline due to an epidemic-induced lockdown, the S&500 earns. Now 17.7% is expected to recur and jump. Wells Fargo further stated that they expect full-year 2021 earnings to grow by more than 30% with earnings per share of the S&P 500 which has reached record levels.



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Recovery may once again be due to financials, followed by material. “Financials are set to lead the recovery with 60.4% growth as expected,” said Gandikota. He said, “Equity markets are showing this jump in earnings with quarterly returns of 17.3% and 10.3% financial and material respectively. Energy and indicators are believed to have declined in the quarter, which is facing debt and cash shortages. However, both regions can lead to full-year income growth.

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Wall Street is looking at the turn that, given the cyclical rebound, Wells favors Fargo Industrials, Financials, and content. In addition, American large-cap equities, small-cap equities, as well as emerging market equities are the pockets where Wells Fargo favors. Meanwhile, it has a neutral view of American mid-cap equities.

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