The S&P 500 (^GSPC) is nearing new highs, but U.S. stocks lack the ingredients they need to move substantially higher, the director of global macro at Fidelity Investments said Friday.
"We're in this bull market purgatory, if you will, where we're not firing on all cylinders. There's no earnings growth," Jurrien Timmer told CNBC's "Squawk Box."
"The market math is pretty simple, right? If the market is going to break out, it either needs earnings or it needs P/E a boost."
That price-to-earnings ratio boost is unlikely, according to Timmer. That's because it would require the Federal Reserve to abandon its plans to raise interest rates or a change in investor sentiment — neither if which he foresees.
Similarly, there are few signs U.S. companies will deliver aggregate earnings growth for the second quarter, he said.
S&P 500 second-quarter earnings are expected to decline 4.8 percent from the year-earlier period, according to FactSet. That would mark the first time year-over-year earnings have fallen for five-consecutive quarters since the third quarter of 2009, FactSet said.
Analysts have lowered earnings estimates for eight of 10 S&P 500 sectors since the end of March, led by downward revisions to the tech sector, FactSet notes. Energy is once again expected to create the biggest overall drag with a nearly 75 percent anticipated drop in year-over-year earnings.
Markets would need just a small bump in earnings growth to move higher, Timmer said.
"With an S&P of 2,100, if we get even a couple percent of earnings growth and you add 2 percent dividends, we'll be at 2,200 in no time. But so far, it's not happening," he said. The index was at 2,092.50 in Friday's premarket.
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