According to researchers at Zacks Investment Management, the\npicture emerging from the Q4 earnings season is one of continued strength and\nmomentum. The proportion of companies beating consensus revenue estimates is\ntracking above what we saw from this group in the preceding earnings season,\nwith earnings beats nearly the same.<\/p>\n\n\n\n
What Does Rising Interest Rates & Volatility Mean for Your Investments?<\/a><\/strong><\/p>\n\n\n\n Rising interest rates could mean more volatility. And with it\ncomes many more unknowns, but do you know there are still ways you can protect\nyour investments?<\/p>\n\n\n\n I want you to make the most out of your long-term returns.\nThis requires thinking long-term and focusing on key data that can help guide\nyour financial decision-making. To help you do this, I am offering all readers a look into our\njust-released February 2022 Stock\nMarket Outlook report.<\/strong> This report will provide you with our forecasts\nalong with additional factors to consider:<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0 Through early February, we had Q4 2021 results from 278\nS&P 500 members, and total earnings were up +30.2% from the same period\nlast year on +16% higher revenues. 78.4% of the companies reporting beat\nearnings-per-share and revenue estimates, pretty much in-line with longer-term\naverages.<\/p>\n\n\n\n Projecting\nout over the next few weeks, total S&P 500 earnings for Q4 are expected to\nbe up +25.6% from the same period last year on +14.1% higher revenues. These\nare solid prints, and are largely better-than-expected given the well-known\nheadwinds of cost pressures, logistical bottlenecks, and the labor impact from\nthe Omicron variant. If\nanything, the real struggle companies are facing is being able to keep up with\na historically high-demand environment.<\/p>\n\n\n\n Of course,\nthese are all backward-looking figures, and what matters to stock prices in\n2022 is where earnings are headed \u2013 not where they\u2019ve been. And it\u2019s plain to\nsee in the chart below that the pace of earnings growth is set to decelerate in\nthe coming quarters:<\/p>\n\n\n\n Now I can revisit the question of rising interest rates and\nmoderating earnings, and what it means for stocks. The basic premise investors\nneed to understand is this: rising interest rates make future earnings less\nvaluable. When risk-free bond yields (which I will refer to as the discount\nrate) are close to zero, investors will pay more for a company with high\nearnings and strong projected future earnings, i.e., growth stocks. This helps\nexplain why many high-flying tech names trade at such high multiples.<\/p>\n\n\n\n However, when the discount rate starts to rise, those future\nearnings are worthless to an investor. In the past few weeks, bond yields have\nrisen to their highest level since 2019, which helps explain the concurrent\nsharp selloff in many high valuation stocks, particularly in the tech sector.\nIf the discount rate is rising, and an overvalued company even hints at weaker-than-expected\nearnings, it probably spells trouble. <\/p>\n\n\n\n Not all stocks necessarily feel the headwinds of a rising\ndiscount rate, however. Value stocks \u2013 which on a relative basis are cheap\nbased on measures like book value and price-to-sales ratios, often look more\nattractive in a challenging rate and earnings environment. That\u2019s why I think\nthe task-at-hand for investors in 2022 is to review your portfolio for quality\n\u2013 to ensure you are not overcommitted to high growth, high valuation companies\nthat may not be able to maintain the same earnings growth pace of previous\nyears. After all, we know stocks have historically done very well early in\nrising rate environments \u2013 it\u2019s just about knowing where the quality is. <\/p>\n\n\n\n Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n We remain positive in our earnings outlook for 2022, and we\nsee the overall growth picture steadily improving particularly as labor issues\nassociated with Omicron start to ease. Looking ahead, many reporting companies so\nfar have offered reassuring, if not altogether positive guidance for the year. <\/p>\n\n\n\n Interest\nrates are also on the rise, however, which means the future earnings of high\nvaluation stocks will be looked at more critically. This environment could pose\nchallenges for \u2018growthy,\u2019 high multiple corners of the market while making\nvalue companies look more attractive by comparison. <\/p>\n\n\n\n In times like this, I recommend that investors focus on factors that can protect their investments for the long term. To help, I am offering all readers our\u00a0Just-Released February 2022 Stock Market Outlook Report<\/a>3<\/a><\/sup>.<\/a><\/strong><\/p>\n\n\n\n You\u2019ll discover Zacks\u2019 view on:<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today! Will an earnings slow down and rising interest rates combine to tank the market? Here’s our assessment <\/p>\n","protected":false},"author":3,"featured_media":8874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-10159","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10159"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10159\/revisions"}],"predecessor-version":[{"id":10201,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10159\/revisions\/10201"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
IT’S FREE. Download the Just-Released February 2022 Stock Market Outlook<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/pic-1-new-1024x652.png\")
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