Bullish Wall Street watcher Bill Stone sees a strong earnings season ahead, with energy and technology stocks grabbing the biggest profits.
In a recent interview, PNC’s former global chief investment strategist cited strong economic fundamentals as a major catalyst for blowout numbers.
“From an earnings standpoint, energy probably will grow earnings about 130 percent, and I didn’t misstate that: 130 percent,” he said Friday on CNBC’s “Trading Nation.” “You have to remember that oil went from a year ago less than 50 dollars a barrel to about 80 dollars a barrel” currently, he added.
Stone noted that energy stocks’ performance was “horrible” last year. The Energy Select Sector SPDR Fund fell seven percent in 2017. So far this year, it’s up nearly 5 percent.
Stone, who now runs Stone Investment Partners, also sees technology making further gains.
“That’s been a winner for a long time,” Stone said. “Earnings are expected to grow about 30 percent for this quarter.”
Overall, he expects SP 500 earnings to grow at 20 percent in the second quarter, and he believed that could help the stocks rally 10 percent from where they started the year. He’s watching geopolitical headlines closely, such as trade war developments, but he doubted they will spiral out of control.
“Right now, we’re nowhere near any sort of recession whether you’re talking in the U.S. or globally on the whole,” Stone said.
But he isn’t completely eliminating the potential of stock market trouble next year. That’s because the comparisons get tougher since the tax cut benefits will already be baked into the earnings numbers, according to Stone. Plus, he is watching the yield curve.
“If we get a yield curve inversion, you usually have between a quarter to a full year before you peak out on the SP 500,” Stone said.
Not a Scientific Survey. Results may not total 100% due to rounding.
Stone Investment Partners’ Bill Stone sees energy and technology as big winners.
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Stone Investment Partners’ Bill Stone highlights two groups that could blow away Wall Street with earnings results. He discusses with Seema Mody.
Bill Baruch of Blue Line Futures and Gina Sanchez of Chantico Global discuss consumer staples with Seema Mody.
Bill Stone, chief investment officer at Stone Investment Partners, discusses energy and tech stocks with Seema Mody.
Trades to Watch
Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
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Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.
In March 2018, Eisen was named co-anchor of CNBC’s “Power Lunch” (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.
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