US technology stocks are poised for positive surprises in 4Q earnings, according to Citigroup strategists.
Alongside technology, consumer staples are anticipated to deliver upbeat results, contributing to the highest percentage of positive surprises since 3Q22. However, the energy and utilities sectors are expected to disappoint.
A select few stocks are predicted to drive a substantial portion of the earnings growth increase projected for the Russell 1000 in 4Q. Five out of eleven sectors are anticipated to report positive earnings growth, with communication services, utilities, and consumer discretionary leading the way.
Conversely, energy, materials, and healthcare sectors are expected to lead in earnings declines, showcasing the varied sectoral dynamics in the upcoming earnings season.
Real estate and utilities are poised for significant earnings growth, while financials are expected to undergo a noteworthy decrease, moving into negative territory.
On the positioning front, analysts noted the return of bullish flows.
“Large short covering and new longs drove a strong move more bullish in S&P futures but positioning remains only modestly net long. Positioning is more extended in Nasdaq and in Eurostoxx, but recent net flows have been small,” they said.