With almost 70% of S&P 500 companies’ results having been released, YoY earnings growth was negative for the first time in this cycle according to Ibes (-2.8% vs. +4.4% in Q3, +8.4% in Q2 and +11.4% in Q1 2022). This was slightly more negative than expected by analysts at the beginning of January (-1.6%) and combines a slowdown in sales and a fall in margins.

Those sectors rich in Big Tech recorded a more marked decline than the average. This was the case for technology (-9.2%), consumer discretionary (-17%) and communication services (-25.4), whose results were down more than expected at the beginning of January. These growth stocks – these three sectors represent over 70% of the MSCI USA Growth Index – have been shown to also have cyclical features and need to correct their over-profitability, which reached its peak with the Covid-19 crisis. This confirms our caution about these sectors and, given their weight in the indices, the US market in general.

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