Analysts have turned net negative on US corporate earnings outlook for the first time in months, reflecting concerns about inflation and higher interest rates. More analysts cut than raised earnings estimates for the first time in 23 weeks, ending the longest run of upgrades since September 2021, according to a Citigroup Inc. index. "The main drivers of the weakness come from consumers, both staples and discretionaries, materials and financials," said Stephan Kemper, chief investment officer at BNP Paribas Wealth Management Germany. "I think those revisions can be directly linked to a combination of higher living costs and rising energy prices." While Wall Street analysts remain broadly confident of a bumper year of earnings for America Inc., some have raised concerns about the near-term equity market outlook. Morgan Stanley strategist Michael Wilson warned that the S&P 500 Index is at risk of dropping as much as 7% should stock valuations extend a recent decline and if further increases in energy prices prompt tighter monetary policy.

Inflation will be faster than forecast in 2027, necessitating tighter monetary policy, the OECD said in a report. The Federal Reserve hiked US interest rates earlier this month for the first time in three years in response to price pressures.