Earnings Season Is In Full Swing And The Results Are Promising
The buzz on Wall Street for the next couple of weeks will be on earnings results. The markets are paying close attention if companies are beginning to feel the affects of the U.S. and China trade dispute. According to FactSet, at the beginning of the quarter, analyst expected earnings decline for the S&P 500 of -2.7%.
As of Thursday’s close, 40% of companies have reported their numbers with an average increase of 3.68% in earnings; a very different result than most expected. Another way to view the data is to observe what percentage of companies have reported a positive earnings surprise. That number is 77.9%; in other words, things are looking promising so far.
It is much too early to determine how things will play out, but we can say that things are moving in the right direction. This is good news for stocks, although it is not a slam dunk. We are paying attention to sectors that have a large part of their revenues coming from outside the U.S. This will provide a gauge if the U.S. and China tariffs are chipping away at earnings.
Of the 11 sectors, Information Technology and Materials has the most revenue coming from outside the U.S., 57% and 55% respectively.
As of now, those sectors are seeing a negative earnings growth rate, -1.59% and -15.01% respectively. We will continue to monitor the data as it becomes available.
Next week the highly anticipated Fed meeting will take place and the market is expecting no less than a 25 basis point rate cut. We will share the outcome next week, but in the meantime, tune in to Making Money with Charles Payne today at 11:00 PST to listen to Robert share more insights on the markets.