Market Update / Into Earnings Season – Monday Morning Market Memo – April 18, 2022

Market Update / Into Earnings Season – Monday Morning Market Memo – April 18, 2022

The major stock market indices ended lower last week. The Dow Jones Industrial Average lost 0.8% (its third straight weekly decline) – the Standard & Poor’s 500 Index dropped 2.1% – and the NASDAQ Composite shed 2.6%.  Equity prices continued to be pressured by rising interest rates, inflation (which rose the most since 1981), and geopolitical uncertainties.  New on the market’s radar, is the start of earnings season.

Earnings Season kicked off last week with several major banks reporting quarterly results.  While Wells FargoMorgan StanleyCitigroupGoldman Sachs, and JPMorgan Chase all beat on Earnings Per Share, commentary and share price reactions were mixed.  Earnings really start to flow this week, with a large and diverse batch of companies scheduled to report.  The market will be digesting earnings results from NetflixInternational Business MachinesProcter & GambleTravelersJohnson & JohnsonNetflixVerizonBank of AmericaUnited Airlines, and Union Pacific (to name just a few).

Looking at expectations for earnings season as a whole: For the first quarter of 2022, earnings for the S&P 500 are expected to grow 5.1%, according to data from FactSet Research.  Checking on market valuation, the forward 12-month Price/Earnings ratio for the S&P 500 is 19, which is above the 5-year average of 18.6 and the 10-year average of 16.8 (also according to FactSet).

Many investors are looking for a strong earnings season to validate the higher-than-average multiple of the stock market.  Remember though, what companies report for the first quarter (which is already history), will be less important than predictions about the future and what numbers they forecast!

As always, don’t hesitate to reach out to us with any questions you may have or if you would like to set up a meeting.


All the best – Southport Station Financial Management, LLC