This Earnings Season is essentially in the history books – with 95% of Standard & Poor’s 500 companies having reported actual results for the third quarter of 2021, 82% of S&P 500 companies have reported a positive EPS (Earnings Per Share) surprise (which is above the 5-year average of 76%) and 75% of S&P 500 companies have reported a positive revenue surprise (which is above the 5-year average of 67%) – according to data from FactSet.
These better-than-expected earnings reports have been fuel for the stock market, with the major stock market averages at or near record highs. Recapping last week’s action – the Dow Jones Industrial Average lost 1.4% to 35,602 – the NASDAQ Composite gained 1.2% to 16,057 which is a new record and its first close above 16,000 – and the S&P 500 inched up .3% to 4,698. Notable in the weekly numbers was the general shift away from financials/energy/value/reopening into technology (especially mega-cap tech) and the “stay-at-home” sector amidst COVID-19 concerns.
While earnings season may be in the rearview mirror, there is still plenty ahead for investors to pay attention to. In addition to rising COVID cases in the U.S. and Europe (with Austria announcing a national lockdown), investors are also tracking items including the level of inflation, and Federal Reserve monetary policy (it was just reported President Biden is renominating Jerome Powell to a second term as Fed Chair). All of these issues have the potential to move the market in either direction.
Looking at the schedule for the week ahead – markets are closed Thursday in observance of Thanksgiving, and will close early on (Black) Friday – typically one of the busiest shopping days of the year and the “official” start of the holiday shopping season. We hope you enjoy Thanksgiving and the long holiday weekend!
All the best – Southport Station Financial Management, LLC