

Bull Markets' Tumultuous Third Year | Sam Stovall on Earnings Expectations, Sector Outlooks, and bull Case for U.S. Stocks
14 snips Jul 2, 2025
Sam Stovall, CFRA Research’s U.S. Equity Strategist, shares his insights on market dynamics and bullish sentiment for U.S. equities. He discusses the critical factors influencing performance in the third year of a bull market, emphasizing sector overweights like technology and healthcare. Stovall also highlights trends among insurance companies and the overall challenges within health insurance stocks. With an optimistic outlook for the S&P 500, he underscores the importance of diversification and smart investment strategies.
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Choppy Third Year in Bull Markets
- The third year of a bull market tends to be very choppy and challenging with modest gains.
- Bull markets often rebound with stronger double-digit gains starting in their fourth year.
Stock Prices Lead Earnings Estimates
- Stock prices often lead fundamentals, requiring optimistic future profit guidance for market gains.
- Earnings estimates have declined sharply in 2025, signaling cautious investor outlook.
Rotate From Winners to Losers After Declines
- After market declines, rotate from last year's winners to last year's losers for better returns.
- Communication services, consumer discretionary, and tech sectors are now leading gains since the April low.