Wall Street's Rising Euphoria May Spell Trouble for Stock Market
- Pace of revisions to U.S. profit estimates highest in 10 years
- Bullish analyst sentiment can be a contrarian indicator
Equity Euphoria Grips Global Markets
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Euphoria on Wall Street that stocks can just keep on building on record highs is getting so stratospheric that it’s reaching levels that previously signaled a slump.
Analysts are ratcheting up their forecasts for U.S. corporate profits at the fastest pace in more than 10 years, according to the research firm Bespoke Investment Group. And that’s happening, unusually, right in the run-up to an earnings-season kick-off. While the upgrades could be taken as a positive reflection on the economy’s outlook, in the past such bullish analyst sentiment has served as a precursor to a market decline.