Analysts on Wall Street have scaled back earnings projections for US companies in the final quarter of 2019. This has put the S&P 500 on track for its slowest pace of earnings growth in four years. Earnings are forecast to rise just 0.8% in Q4. That number is way down from a forecast of 4.1% growth at the beginning of October and a 7.2% projection in the early summer.
These projections are raising concerns about the vulnerability of the current market rally. The United States Federal Reserve has moved forward with three rate cuts in 2019, citing the global trade war and slowing domestic and international growth. Analysts had anticipated that the benefits of the U.S. Tax Cuts and Jobs Act would begin to wane this year.
The iShares Core S&P 500 ETF (NYSE:IVV) seeks to track the investment results of the S&P 500. Shares have climbed 25% in 2019 so far after a 4% decline in 2018. This was largely due to the sharp drop in equity markets the final four months of the previous year. Investors should avoid paying a premium for this ETF right now.
Economists still expect steady growth for the US economy in 2020. However, the global trade war and slowing growth will continue to generate turbulence. This ETF is still a solid long-term hold, but value investors should look to add at more favourable price levels in this environment.
