As the s&p 500 index third-quarter earnings season continues, more than one-third of s&p 500 index companies have already released their third-quarter earnings reports.

Recently, Bank of America conducted a detailed analysis of the wording used by executives of US stock companies during the third quarter earnings conference calls, interpreting a significant signal that profits of US stock companies will see a substantial increase in 2025.

A keyword mentioned frequency soared.

On Monday Eastern Time, Bank of America strategist Savita Subramanian stated in a report that with over one-third of companies in the S&P 500 index reporting earnings, the frequency of mentioning the word "bottom" during earnings conference calls has significantly increased.

"Due to weakness in commodities/manufacturing, (US) companies have been operating in a soft demand environment over the past two years. But the signs we see indicate that the worst period may be over."

Bank of America has analyzed all records of third quarter earnings conference calls of US stock companies to date and found that the frequency of mentioning the word "bottom" has increased by 56% compared to the same period last year.

More importantly, the frequency of mentioning the term "weak demand" has dropped to its lowest point in the past two years, which is a positive sign for cyclical companies in the manufacturing sector.

Sabrulamani stated: "Historically, an increase in the frequency of the term 'bottom' often signals a turning point in earnings per share."

According to statistics, the mention of the term 'bottom' surged significantly in the earnings conference calls of 2009 and 2020, followed by a more than 75% year-on-year increase in quarterly earnings per share of s&p 500 index components.

Sabrulamani also mentioned that compared to the 2020 election cycle, the mention of the word 'election' in the third quarter earnings conference calls this year soared by 62%. She stated that considering the uncertainty of the election, this indicates a 'wait-and-see' investment attitude in the market.

"Interestingly, history shows that investment activities typically accelerate after the election," Sabrulamani said. "We believe that the election may be a trigger event for companies to release capital spending, especially in the case of low interest rates."

In Sabrulamani's view, the appearance of the above signals indicates that manufacturing activity of US stock companies will rebound in the first half of next year, the Fed may continue to lower interest rates, and uncertainties surrounding the presidential election will also dissipate - all of these are bullish factors for US stocks.

Editor/rice