As we often say – earnings are the mother’s milk of stock prices! Wrapping up earnings results: For the first quarter of 2024, with 98% of Standard & Poor’s 500 companies reporting actual results, 78% of S&P 500 companies have reported a positive Earnings Per Share surprise and 61% have reported a positive revenue surprise. The percentage of companies reporting EPS above estimates is equal to the 1-year average, above the 5-year average of 77%, and above the 10-year average of 74% (according to data from FactSet).
The generally positive earnings results for the first quarter of 2024 have been fuel for the stock market rally so far this year. With earnings season now behind us, the market will be paying (even more) attention to inflation and the timing/likelihood of interest rate cuts by the Federal Reserve. The Bureau of Economic Analysis reported last Friday morning that the Personal Consumption Expenditures Price Index, which is the Federal Reserve’s preferred gauge of inflation, rose 0.3% in April and 2.7% on an annual basis. The report was in-line with market expectations, and investors breathed a sigh of relief there was not a negatives surprise.
The Dow Jones Industrial Average rose over 570 points (1.5%) on Friday, posting its best day of the year – while the Standard & Poor’s 500 Index gained .8 percent. For the week, however, the major averages finished lower. The Dow fell 1% to 38,686.32, while the Standard & Poor’s 500 Index and NASDAQ Composite each had their 5-week winning streaks snapped, falling .5% to 5,277.51 and 1.1% to 16,735.02, respectively.
The number to watch in the week ahead is the Jobs Report, scheduled to be released Friday morning by the U.S. Bureau of Labor Statistics. Expectations are the economy added 180,000 jobs last month and the unemployment rate held steady at 3.9%. The employment situation along with the level of inflation are the determinants of monetary policy by the Federal Reserve, so the jobs report will be widely followed and could move the market.
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All the best – Southport Station Financial Management, LLC