With rate cuts now in the rear-view mirror, and with the US market trading at an all-time price high at the end of last week, attention is likely to turn to corporate earnings to make sure we aren’t overpaying for stocks at this point.

Forecasts for S&P 500 earnings have been gently drifting down all year, which is perfectly normal as analysts routinely start the year on too optimistic a note and end up dialling down their expectations.

The latest estimate for third-quarter reported index earnings is $54 compared with $47.65 last year, while fourth-quarter reported earnings are seen hitting $57.56 against $47.79, taking the full-year total to $212.11, a 10.2% increase on 2023.

The biggest contribution is expected to come from technology stocks (22% of total index earnings for the third quarter and almost 25% for the fourth quarter), followed by financials (17.6% and 17.3%) and health care (13.3% and 13.2%).

Meanwhile, this week’s UK September PMI survey showed a solid rise in private-sector activity, albeit at a slower rate than in August, marking 11 straight months of continuous expansion.

Also pleasing, especially for the Bank of England, was the news price rises slowed to more than a three-year low as weak inflation in the service sector more than offset price hikes by manufacturers who are experiencing higher wages and shipping costs. 

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