First-quarter earnings rose 15 percent year over year; second-quarter earnings are expected to have risen 6.2 percent, according to S&P Capital IQ. “While these numbers are exceptional,
particularly amid a slow growing economy, it is unlikely that coming quarterly earnings are
going to stack up well,” Rowan said.
Meanwhile, technical analysts at Credit Suisse believe the S&P 500 is “attempting a correction lower” after reaching its target of 2,450/2,500.
The S&P has gone more than a year without a 5 percent correction for just the sixth time ever, according to Ryan Detrick, senior market strategist at LPL Financial.
But Credit Suisse analyst David Sneddon said rising yields in the U.S. are a potential headwind for stocks. “Higher Real Rates often lead to a higher US$,” he said in a note Tuesday. “Higher US yields are also seen as a negative for US Tech.”
Yields have risen sharply over the past month. in that time, the U.S. 10-year yield has jumped from around 2.12 percent to approximately 2.3 percent.
Conversely, tech stocks hit a snag before recovering some ground. Tech is the S&P’s best-performing sector this year, rising nearly 20 percent.