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The Stock Market's Profit Bet

Writer's picture: Joseph MezrichJoseph Mezrich

Typically, earnings growth is more important than sales growth for stock performance. However, as the chart illustrates, this was not the case in 2024. When the market rebounded in early August after the decline in July, sales growth became more significant than earnings growth for stocks in the S&P 500. Since the beginning of August, the long-short factor return for sales growth of S&P 500 stocks, measured as sector-neutral, has increased by 10%, better than the return from momentum, which rose by 8.5%. In contrast, the earnings growth factor return has declined by 3% since the beginning of August.

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