After a spell of high volatility driven by uncertainty over global trade policy and the threat of rise in prices of essential commodities, Wall Street is looking for some respite in the upcoming earnings season. Q1 is expected to be one of the strongest in years, both in terms of earnings and revenues. Such solid quarterly profits could provide support to the markets.
Earnings expectations are rising of late mostly due to the recently-passed tax reform bill that sharply trims corporate tax rates.
Upbeat economic scenario both at home and abroad is also one of the primary factors that will help earnings pick up pace.
Given the positive trend, investing in blue-chip stocks that are likely to make the most of the earnings season seems judicious. But, why blue chips? This is because such stocks are positioned to report impressive earnings results as they mostly have a strong balance sheet and solid cash flow.