The three major stock market benchmarks just posted their best week since November, with the Dow Jones Industrial Average rising 3.9%, the NASDAQ Composite jumping 6%, and the Standard & Poor’s 500 Index gaining 4.7%, closing at a record 3,887. In the prior week, the indices registered their worst weekly performance since October – welcome to the stock market! Besides the notable week-to-week reversal, the larger message from that data is for investor’s NOT to let short term swings take them off their long term strategies!
Stocks rose last week based primarily on optimism around the pace and effectiveness of vaccines and hopes for more and bigger stimulus out of Washington. Adding to this thought, the January Jobs Report showed disappointing jobs growth, but Wall Street took this soft number to mean we are more likely to get fiscal stimulus to support the economy. Also helping support prices last week is an earnings season that is looking good so far, as results in aggregate are exceeding market expectations.
According data from FactSet – for the fourth quarter of 2020, with 59% of the companies in the S&P 500 reporting actual results, 81% have reported a positive EPS (Earnings Per Share) surprise and 79% have reported a positive revenue surprise. If 81% is the final percentage, it will tie the mark for the second-highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking the metric in 2008.
Still plenty of earnings reports to come, with the week ahead set to see numbers from companies such as Global Payments, Cisco Systems, Twitter, Coca-Cola, General Motors, MGM Resorts International, Under Armour, Zillow Group, Uber Technologies, Duke Energy, Expedia Group, Kellogg Co, Kraft Heinz, PepsiCo, Tyson Foods, and Walt Disney. As always, feel free to contact us with any questions or concerns you may have, or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC