Corporate America has never been better at turning your spending into their profits

US business profits made a step-function jump during the pandemic, and aren’t looking back.

According to Wall Street, the outlook for corporate America to efficiently turn sales into profits has never been better — at least among the publicly traded companies that make up the S&P 500.

The 12-month forward expected profit margin for the benchmark US stock index, in aggregate, has climbed up to 13.65%, surpassing levels reached in April 2022.

It will likely come as no surprise that at the sector level, the biggest driver of margin expansion relative to the prior peak has been technology (up from 25.2% to 27.4%). Next up in terms of profit fuel added are communications services (which houses the likes of Meta and Alphabet), followed by consumer discretionary (which includes Amazon).

Hat tip to Kevin Gordon, senior investment strategist at Schwab, for flagging.

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SpaceX gets a wave of bullish ratings from Wall Street analysts

SpaceX received more than a dozen positive analyst calls on Tuesday — including from major Wall Street banks — as they initiate coverage on Elon Musk’s space and AI company.

SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

Still, SpaceX fell more than 5% on Tuesday amid a broader sell-off, and is currently effectively flat from its opening price of $150 a share.

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Meta surges on report it’s starting a cloud business to sell excess AI compute

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