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Data: FactSet; Chart: Axios Visuals

Despite cutting expectations for companies' earnings by the most in history and revenue by the most since 2009, Wall Street analysts are getting increasingly bullish on the overall direction of the U.S. stock market.

What's happening: Equity analysts are expecting earnings in the second quarter to fall by 43.8% — the most since 2008's fourth quarter 69.1% decline.

  • They also project earnings this year to decline by 28.6%, the largest decrease in the annual EPS estimates for the index over the first six months of the year since FactSet began tracking the data in 1996.
  • Revenue estimates, too, have been cut back significantly, with year-over-year revenue expected to fall 11.2% in Q2, which would mark the steepest decline since Q2 2009 (11.5%).

Of note: Through Thursday, 185 S&P 500 companies had withdrawn or confirmed a previous withdrawal of annual EPS guidance for fiscal year 2020 or FY 2021 and just 49 have issued EPS guidance for Q2 2020.

  • The number of companies issuing EPS guidance to date for Q2 2020 is less than half the 5-year average for a quarter of 106.

On the other hand: Price targets for the S&P have steadily risen in recent weeks with data now showing the average bottom-up, year-end target price is 3328.37 — 6% above the index's current level, FactSet senior earnings analyst John Butters points out in note to clients.

  • Of the 10,356 analyst ratings of individual S&P companies, 52.7% are buy ratings, 41.1% are hold ratings, and 6.2% are sell ratings.

Between the lines: The expectations for higher stock prices also defy already frothy valuations.

  • The S&P 500's forward 12-month price-to-earnings ratio is 21.8, well above the index's five-year average of 16.9 and 10-year average of 15.2.
  • At the end of the first quarter, the S&P's forward 12-month P/E ratio was 15.6.

By the numbers: "Since the end of the first quarter (March 31), the price of the index has increased by 20.6%, while the forward 12- month EPS estimate has decreased by 12.7%," Butters notes.

Go deeper

Oct 14, 2020 - Health

The pandemic isn't keeping the health care industry down

Illustration: Aïda Amer/Axios

Health care's third-quarter earnings season has started, and if the quarter is anything like the previous one, the industry will continue to fare relatively well even amid the broader economic turmoil.

The bottom line: The coronavirus dominated the spring and summer, which forced people to put off care, but people have resumed getting procedures and seeing their doctors.

Wall Street braces for more turbulence ahead of Election Day

Illustration: Eniola Odetunde/Axios

Wall Street is digging in for a potentially rocky period as Election Day gets closer.

Why it matters: Investors are facing a "three-headed monster," Brian Belski, chief investment strategist at BMO Capital Markets, tells Axios — a worsening pandemic, an economic stimulus package in limbo, and an imminent election.

Dave Lawler, author of World
2 hours ago - World

How Biden might tackle the Iran deal

Photo illustration: Aïda Amer/Axios. Photo: Drew Angerer/Getty Images

Four more years of President Trump would almost certainly kill the Iran nuclear deal — but the election of Joe Biden wouldn’t necessarily save it.

The big picture: Rescuing the 2015 Joint Comprehensive Plan of Action (JCPOA) is near the top of Biden's foreign policy priority list. He says he'd re-enter the deal once Iran returns to compliance, and use it as the basis on which to negotiate a broader and longer-lasting deal with Iran.