(Bloomberg) -- The prospect for global earnings growth this year is dim despite better-than-expected first-quarter results in the US and Europe, according to strategists at Goldman Sachs Group Inc. and Bank of America Corp.

Sticky inflation and the recent turmoil in the financial sector will likely lead to slower economic growth in the second half of the year, Goldman Sachs strategists including Peter Oppenheimer and Sharon Bell in a note dated May 4.  

They are forecasting “roughly flat” earnings growth in most regions this year and “very little earning per share growth in Europe and the US through to end 2024.” 

The bank is expecting 5% earnings growth for the US and Europe in 2024, 6% for Japan and 17% for Asia, from a low base in 2021. Oppenheimer was bearish through most of last year and correctly called the stock slump in the second half.

The lackluster outlook, combined with the high valuations for equities, “does not offer much return for the risk in the face of 5% risk free US dollar cash return,” the Goldman strategists said.

The US and Europe had a strong earnings season for the first quarter after analysts slashed estimates leading up to the reporting period. Nearly 85% of S&P 500 companies have reported earnings so far and 79% of those firms beat estimates, according to data compiled by Bloomberg Intelligence.

“Notwithstanding a healthy proportion of beats in the 1Q earnings season, earnings per share projections continue to spell out a muted outlook,” BofA strategists including Michael Hartnett said in a May 4 note. “Leading indicators anticipate a mild contraction in 2023.”

He said these estimates do not reflect a recessionary setting and that the market would have priced in most of the bad news. Hartnett was correctly bearish through last year, warning recession fears would fuel a stock exodus, but his call that the S&P 500 would drop to 3,800 by March 8 didn’t materialize.

Read more: BofA’s Hartnett Says Fed Rate-Hike Pause No Reason to Buy Stocks

Meanwhile, JPMorgan Chase & Co. strategists led by Mislav Matejka said that even though firms are beating expectations, price reaction has been subdued as equities rallied leading up to the earnings season. “Stocks that are beating estimates are outperforming by less than typical, while those that are missing are being penalized by more than their historical median,” they said in a note.

(Updates to recast lead, add chart and add JPMorgan strategists’ comments in the last paragraph.)

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