The US stock earnings season will kick off this week, as long as companies express optimism about the Fed's interest rate cut prospects, the market should be expected to rise.

This is the conclusion drawn by Bank of America based on data. The bank points out that, in addition to this dynamic, Wall Street has set a relatively low bar for third-quarter earnings.

Bank of America analysts expect a 2% earnings growth for the US stock market in the third quarter, lower than the market's expectation of 4% and 11% earnings growth in the second quarter.

Analysts stated that the modest growth in the second quarter, coupled with the cooling macro environment, has lowered investors' expectations for this earnings season.

In a report on Tuesday, they stated: "The bar is not high. As long as companies can overcome the adverse factors in the macro economy and see early signs of improvement brought by the interest rate cuts, the stock market should yield returns."

Analysts believe that the market widely expects the softness in the economy to have been already digested, with this quarter's earnings per share expectations being reduced by 4%, making it more likely for earnings to outperform expectations in the case of lower interest rates.

The Fed lowered interest rates by 50 basis points at the end of the third quarter, driving the S&P 500 index to hit a historical high, as the market begins to price in the upcoming rate easing cycle.

Analysts at Bank of America pointed out that lower interest rates will trigger a rebound in the most interest rate-sensitive industries, such as manufacturing and real estate, which have been most affected by the Fed's past rate hiking cycles.

The ISM Manufacturing Purchasing Managers' Index has experienced the second longest period of historical lows in the past two years, with existing home sales falling by nearly 40% compared to the same period last year, showing clear signs of weakness against a backdrop of high interest rates.

Analysts recommend observing these industries before the financial reports are released, looking for early signs of improvement brought by lower interest rates.

"Many people say that the rate hiking cycle does not have a significant impact on the economy because the U.S. economy is primarily driven by consumption/services (70%). However, rate-sensitive industries (such as manufacturing and real estate) have definitely been hurt by the actions of the Fed," they said, adding, "But now that the easing cycle has officially begun, we expect manufacturing and housing activities to recover healthily, driving the s&p 500 index to profit growth by 2025."

Analysts have pointed out that so far, among the 21 companies that have already reported third-quarter earnings, 62% have exceeded expectations in both earnings per share and revenue, compared to 49% historically and 47% in the previous quarter.

While U.S. stocks are expected to continue to record modest profit growth this quarter, analysts note that the focus is not on this quarter, but on companies' outlook for the next few quarters under the Fed's accommodative policy.

They expect the upward trend in U.S. stocks to expand into next year, with the 'Big Seven' slowing profit growth in the third quarter. Starting from the fourth quarter, profit growth of the other 493 stocks in the benchmark index is expected to accelerate to double-digit percentages.

Analysts stated, "Although earnings of the 'Big Seven' are still expected to exceed those of the other 493 companies, given the extreme valuations and position gaps, we expect the narrowed earnings growth difference to be an important driver of broader market gains."