Here are 2 groups that could blow away expectations when earnings season kicks off

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Top strategist Bill Stone pinpoints two winning plays as investors gears up for earnings season

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.

The two top SP plays into earnings season, according to top strategist Bill Stone

Stephanie Landsman

Trading Nation


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

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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