Wednesday, January 13, 2016

Ready to Rebound?

The stock market is off to a rough start in 2016, but there might be something to save it: quarterly earnings season, which kicks off this week. The S&P 500 index has risen an average 2.7 percent during the past four earnings seasons, according to Bespoke Investment Group.

On the other hand, the S&P index has fallen in each of the periods leading up to those earnings, dropping an average of 2 percent between reporting periods. Since 2001, when the large-cap S&P index has been down between earnings seasons, the index has rallied an average 0.9 percent during the ensuing reporting period, according to Bespoke. When the S&P 500 has been up between earnings seasons, the index has risen by an average of just 0.5 percent during the following reporting period.

Heading into this reporting season, the S&P 500 was down 6.3 percent since the third-quarter reporting season finished. So we may be in for some good news - for more reasons than one.

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