march 11  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom while us earnings estimates have been holding up despite recent market turmoil profit growth stability will be key for the market going forward brian belski chief investment strategist at bmo capital markets wrote in a note this week estimates for the firstquarter sp 500 profit growth have come down a bit but expectations for fullyear 2022 earnings growth have gone up slightly he noted when uncertainty anxiety unpredictability and headline risk rule the roost we prefer to rely on corporate earnings trends to attain a better understanding of the actual impact that current market events are having and will potentially have on the operating performance of companies he wrote stocks have been especially choppy since russias invasion of ukraine about two weeks ago and the resulting spikes in oil and other commodity prices read more looking ahead we believe earnings growth stability will be important belski wrote the sp 500s 12 decline from its january peak has sobered up the bulls on wall street bofa analysts say but then they let the other shoe drop and its a whopper the sp 500 is statistically expensive on 14 of 20 measures bofa said in a note on friday the benchmark us equity index is still historically expensive on the majority of measures bofa tracks  by 40 using generally accepted accounting principals or gaap bofa says the trailing pricetoearnings ratio is currently 276 and the average pe since 1960 is 196 excluding the tech bubble the average pe is 188 while a more normalized trailing pe is 221 or 34 above the longterm average valuations suggest tepid future returns or about 15 over the next decade bofa analysts said thats less than the 1875 coupon on the 10year treasury note due in february 2032 in short bofa said geopolitical risks are largely priced in after russia invaded ukraine but valuations suggest tepid longterm returns we expect more volatility bofa said europe gains after three weeks of losses 1151 est1651 gmt europes benchmark index stoxx closed 1 up today making this week the first weekly gain after three consecutive weeks of losses european shares are 22 higher than a week ago but are still 8 down from four weeks ago with russias invasion of ukraine triggering heavy selling and a volatility spike travel  leisure sxtp enjoyed the strongest rebound on friday closing 35 higher while industrials sxnp and financial services sxfp were both 2 up oil and gas sxep autos sxap and utilities sx6p barely moved all closing basically flat on friday the percentage of individual investors with a bearish shortterm outlook for the us stock market rebounded to an unusually high level while optimism fell back to an unusually low level in the latest american association of individual investors sentiment survey aaii with this neutral sentiment closed in on its historical average aaii reported that bearish sentiment or expectations that stock prices will fall over the next six months rose by 43 percentage points to 458 this is above the threshold of 401 separating typical and unusually high readings pessimism is above its historical average of 305 for the 16th consecutive week bullish sentiment or expectations that stock prices will rise over the next six months slid by 64 percentage points to 240 this is below the threshold of 280 separating typical and unusually low readings optimism is below its historical average of 380 for the 16th consecutive week neutral sentiment or expectations that stock prices will stay essentially unchanged over the next six months gained by 20 percentage points to 302 this is the third consecutive week that neutral sentiment is below the historical average of 315 aaii noted that the sp 500 index has gone on to realize aboveaverage and abovemedian returns during the six and 12month periods following unusually low readings for bullish sentiment unusually high bearish sentiment readings historically have been followed by aboveaverage and abovemedian sixmonth returns in the sp 500 with these changes the bullbear spread fell to an unusually low level of 218 from 11 last week read more  the american consumer has a lot to contend with these days juggling immediate concerns with nearterm worry the price of gasoline and relaxing covid restrictions war abroad and a waning health crisis on the home front and the mood of the american consumer  who does the economic heavy lifting contributing about 70 of us gdp  has faded more than expected this month the university of michigans preliminary march reading of its consumer sentiment index usumspeci dropped 31 points to 597 more than double the 14point drop economists forecast read more the current conditions component held up relatively well shedding a mere 04 points to 678 but even so that marks its lowest reading since august 2009 nearterm expectations provided a much bigger surprise to the downside sliding 5 full points to 544 its lowest print since october 2011 across the board the drop was attributable to falling inflationadjusted incomes recently accelerated by rising fuel prices as a result of the russian invasion of ukraine writes richard curtin chief economist at umichs surveys of consumers personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid1940s inflation expectations over the next five years held firm at an elevated 30 but headlines and prices at the gas station sent oneyear inflation expectations through the roof climbing half a percentage point to 54 the yearahead expected inflation rate rose to its highest level since 1981 and expected gas prices posted their largest monthly upward surge in decades curtin adds consumer inflation fears seem to have been validated by the labor departments whitehot cpi report released on thursday which showed annual headline inflation growth hitting a fourdecade high deteriorating confidence and rising nearterm inflation expectations are also a concern for policymakers given inflation is the highest in four decades and is showing no signs of easing says rubeela farooqi chief us economist at high frequency economics the graphic below shows umich oneyear and fiveyear inflation expectations against core cpi which strips out volatile food and energy prices even so its deeds that matter not words its worth pointing out that consumer surveys often diverge from their actual behavior as always remember that sentiment and spending are not the same thing ian shepherdson of pantheon macroeconomics helpfully writes and the chance of a significant divergence now is greater than in the past because households have 25t in excess pandemic savings far more than the amount needed to pay for more expensive gas monthly changes in the headline umich print are inconsistent with the personal outlays element of the commerce departments personal consumption expenditures report which tracks the amount of disposable income consumers spend the chart below is evidence that consumers often dont do as they say investor confidence took its cue from the consumers with the major us stock indexes having pared or reversed early gains by late morning trading value ivx had the edge over growth igx as the market leading fangs nyfang pulled the nasdaq into the red major us stock indexes are mostly higher in choppy morning trading friday led by the dow dji which rose above 1 early before paring gains the nasdaq ixic is lower and the sp 500 spx is roughly unchanged developments in ukraine remain key with russian forces who are bearing down on kyiv regrouping northwest of the ukrainian capital ukrainian president volodymyr zelenskiy said ukraine had already reached a strategic turning point in the conflict russian president vladimir putin said there were certain positive shifts in talks with ukrainians read more among drags on the sp 500 and nasdaq is oracle corp orcln whose shares are off 2 a day after the software firm posted a tepid thirdquarter profit due to higher spending for its cloud services here is the early market snapshot the kind of political risk one can live with 1002 est1502 gmt war in ukraine probably doesnt qualify as a black swan as analysts had months to model the probability that russia would actually go for a full fledged invasion of its neighbor rather than a totally unpredictable event like a sudden pandemic this was more a case of geopolitical risk assessment gone very very wrong by contrast five years ago there were palpable worries that the french presidential election could potentially end up installing a farright or farleft candidate at the elysée palace that stress was visible on equity markets emmanuels macron landslide victory brushed these worries aside and in retrospect they looked somewhat overblown no such thing at the moment the first round of the 2022 election is just a month away and political risk is priced at a minimal level the spread between the yield of frances 10year government bond and germanys bund has deepened somewhat since the beginning of the year but incoming ecb quantitative tightening bears much of the blame for fears that macron will be replaced by a populist have rarely been so low the war in ukraine has had the effect of boosting macrons lead over his opponents by a pretty substantial margin read more we lift the probability of macron’s reelection to 75 from 60 berenberg economists wrote in a note today they put a 10 chance on his centerright contender valérie pécresse that leaves a meager 15 split between the three candidates including 2017 finalist marine le pen whose victory would likely spook investors while 15 doesnt seem much the model of the economist now actually puts a 96 probability to macrons reelection nasdaq 100 futures on the plus slide 0900 est1400 gmt cme nasdaq 100 futures are rallying more than 1 in premarket trade on friday this after russian president vladimir putin said there were certain positive shifts in talks with ukraine on the plus side the futures which were down more than 5 vs last fridays close at one point on tuesday are now off only around 07 for the week additionally even at their worst level on tuesday they did not violate their latefebruary intraday trough of note daily momentum is exhibiting a positive setup since plunging in latejanuary to its most oversold level in nearly two years the rsi has now formed higher troughs despite lower nqcv1 closing lows this building positive momentum underscores the potential for a rally although since it broke down in latenovember of last year this indicator has been unable to muster enough strength to move back above the 7000 overbought threshold thus the jury may still be out on the implications of the positive convergence in any event with a rally the futures will still have to contend with their 30day moving average this moving average has been consistently capping strength since the futures broke down in early january however in another plusside development this descending moving averages slope is easing its 1day rateofchange is now the least negative its been since the early january breakdown this can suggest if challenged it may be less likely to remain an impenetrable barrier on a closing basis for fridays live markets posts prior to 0900 est1400 gmt  click here terence gabriel is a reuters market analyst the views expressed are his own