Big S&P 500 Bear Market Case Sees Inflation Finally Eating Everything
- Operating margin estimates have stalled out since October
- Consumers are starting to push back against price hikes: BI
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Corporate America’s well-oiled earnings machine has been the backbone of virtually every bullish equity argument this year. It’s helped stocks power past the Federal Reserve’s hawkish pivot and each new variant of the coronavirus. But stubbornly high price pressures may end up forcing a rethink of those ever-increasing profitability predictions.
So goes the main bear case on U.S. stocks, which notes that after a steady climb since last year, 12-month estimates for the S&P 500’s operating margins have stalled out since mid-October. The plateau coincided with the start of an earnings season that saw companies sound the alarm on rising input costs and labor difficulties.