Strong Earnings Growth and Attractive Seasonality May Favor Equity Overweight

Important Information & Disclosures

¹Source: UBS; Bloomberg. ²Source: Haver Analytics; Bloomberg; Fidelity.

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees that these methods will be successful. Economic charts are provided for illustrative purposes only. The information provided herein is subject to market conditions and is therefore expected to fluctuate.

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Index Definitions:
Performance is compared to an index, however, the volatility of an index varies greatly. Indices are unmanaged and investments cannot be made directly in an index.
The S&P 500^® Index is a readily available, carefully constructed, market-value-weighted benchmark of common stock performance. Currently, the S&P 500 Composite includes 500 of the largest stocks (in terms of stock market value) in the United States and covers approximately 80% of available market capitalization.
The S&P 600^® Index is an index of small-cap stocks managed by Standard & Poor’s. It tracks a broad range of small-sized companies that meet specific liquidity and stability requirements. This is determined by specific metrics such as public float, market capitalization, and financial viability, among other factors.
The Dow Jones Industrial Average (DJIA) is an index that tracks 30 large, publicly-owned blue chip companies trading on the New York Stock Exchange (NYSE) and the NASDAQ.
The Nasdaq 100 Index is a major stock market index tracking 100 of the largest non-financial companies, including Microsoft, Apple, and Nvidia.

Technical Terms:
The price-to-earnings (P/E) ratio compares a company’s share price with its earnings per share (EPS). Analysts and investors use this to determine the relative value of a company’s shares in side-by-side comparisons. Earnings per share (EPS) measures a company’s profitability by dividing its net income (minus preferred dividends) by its weighted-average number of common shares outstanding. The Forward price-to-earnings (P/E) ratio is a stock valuation metric that divides a company’s current share price by its estimated future earnings per share over the next 12 months. Forward EPS (Earnings Per Share) is a prediction of a company’s future net profit divided by its number of shares outstanding Return on investment (ROI) is a simple metric that measures the profit or loss of an investment compared to its cost, expressed as a percentage. Capital expenditures (capex) are funds companies use to acquire, upgrade, or maintain physical assets like buildings, technology, or equipment, with the goal of increasing operational scope or future economic benefits. Free cash flow (FCF) is the cash a company generates from its regular operations after paying for its day-to-day expenses and long-term investments, such as property and equipment. Return on equity (ROE) is a financial metric that measures how effectively a company uses shareholders’ equity to generate net income and profit. It shows how much profit a business makes for every dollar of equity invested by its owners. Hyperscalers are large companies that provide massive cloud computing, data storage, and networking infrastructure. They operate globally distributed fleets of data centers containing millions of servers, using software automation to scale resources dynamically up or down based on demand. Major hyperscaler companies include Amazon, Microsoft, Google and others. (Technical definitions are sourced from Investopedia and Corporate Finance Institute.)