Earnings tend to rebound sharply during the start of bull markets and grow less rapidly as the bull ages. Based on the performance of forward earnings over the past year, this bull market is aging. After all, it will be 3½ years old next month.
S&P 500 revenues are highly correlated with manufacturing and trade sales in the U.S. During June, these sales grew just 3% year-over-year, the slowest pace since November 2009. S&P 500 revenues edged up 0.3% quarter-over-quarter during Q2 and were only 1.9% above last year, the slowest pace since Q3 2009.
Industry analysts are lowering their expectations for revenue growth this year and next year. In mid-August, they expected S&P 500 revenues to increase 2.7% this year and 4.1% next year.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.