Welcome to the first-quarter earnings season!

Earnings season is always my favorite time of the year because it’s when markets are rational. In other words, companies with solid fundamentals, along with growing sales and earnings, get rewarded. And those that don’t – well, they get punished.

This earnings season is particularly welcome since investors clearly weren’t happy with last week’s inflation reports.

We covered those in Saturday’s Market 360. But here is a brief recap of the headline numbers from the two reports…

• The Consumer Price Index (CPI) increased 0.4% in March and was up 3.5% in the past 12 months. That compares to the 3.2% annual pace in February and economists’ estimates for a 3.4% annual pace.
• The Producer Price Index (PPI) only rose 0.2% in March, compared to the 0.6% rise in February. But headline PPI increased 2.1% year-over-year, which marked the biggest jump since April 2023. Economists expected a 2.2% annual pace.

In the wake of the hotter-than-expected inflation reports, the 10-year Treasury yield continued to climb through the end of last week and started this week above 4.6%. That’s up from 4.2% at the end of March.

As a result, Wall Street anticipates that the Federal Reserve will only cut rates twice this year. The fact is that due to rising interest rates, it will be very difficult for Fed Chair Jerome Powell to achieve a consensus for a key interest rate cut in June. Most folks now expect the first rate cut to occur in July or September.

The reality is that inflation remains higher than where the Federal Reserve would like it to be. In fact, just today, Fed Chair Jerome Powell said it will take “longer than expected” to achieve the confidence needed to bring inflation to their 2% annual target.

The good news, though, is that Wall Street should be able to put these inflation reports in the rearview mirror to focus on first-quarter earnings, which began on Friday with the big banks. (You can read my earnings review of three of the big banks here.)

So far, the S&P 500 has reported earnings growth of 0.9% for the first quarter. But it is important to keep in mind that we are in the early days. In fact, FactSet is now projecting that the index will report earnings growth of more than 7%. That’s more than double expectations for 3.4% average earnings growth at the end of March.

Now, before the earnings season starts to heat up next week, you’ll want to make sure that you’re investing in stocks with superior fundamentals. These are the stocks that are most likely to post positive earnings surprises. And those stocks should, in turn, bounce like fresh tennis balls.

So, in today’s Market 360, I’ll share the stocks that are likely to report weak earnings and fall like rocks. I’ll also tell you the stocks I expect to perform the best… and how you can use Growth Investor to profit from the next disruptive wave of innovation.

This Week’s Ratings Changes

I took a fresh look at the latest institutional buying pressure and each company’s financial health and revised my Portfolio Grader for 64 big blue chips. Of these 64 stocks, 20 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 21 stocks were downgraded from a C-rating to a D-rating (Sell).

I’ve listed the first 10 stocks rated as Sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – here.

Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.

While earnings season should help get the stock market back on track, there’s also an innovative technology on the horizon that could serve as a catalyst for select tech stocks and supercharge their growth. And growth-minded investors will want to get in before the rest of the crowd…

I’m talking about Quantum Computing-as-a-Service, or QaaS.

This revolution will be the biggest disruption of all time as it sets to disrupt America’s largest industries, including: Pharmaceutical, Oil & Gas, Telecom, Farming, Aerospace, Logistics, Automotive and Finance. We’re talking about industries worth a collective $46 trillion that could be turned on their head, thanks to this breakthrough technology.

And there’s one tiny QaaS company set to dominate the industry. Some experts predict it could be the next NVIDIA Corporation (NVDA) – a stock that’s made us nearly 2,000% over at Growth Investor.

That’s because in the same way NVIDIA’s chips provided the backbone for AI, this small company will provide the backbone for QaaS.

Get the details on this cutting-edge technology – and how it could impact your portfolio – here.

(Already a Growth Investor subscriber? Click here to log in to the members-only website now.)

Sincerely,

Louis Navellier

Editor, Market 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)