Friday, February 8, 2019

The Market Beats Earnings Season

Here's a paradox: Even though corporate earnings have been relatively weak so far, with fewer companies beating Wall Street expectations than in recent quarters, the S&P 500 is up roughly 5 percent since the middle of January. Stocks of companies that have reported their results have risen by an average of 1.1 percent, the largest post-earnings jump in a decade, according to Bespoke Investment Group.

They're doing all right even if they don't beat the Street's analysts. In recent years, the shares of companies that didn’t beat expectations lagged behind the broader market by 3.5 percentage points in the trading day that followed. This year, they have trailed by only 1.1 percentage points, according to Credit Suisse.

Over the last three months, overall, stocks reporting earnings have posted a median one-day gain of 0.78 percent.  That’s the strongest upside reaction to earnings in at least the last five years.

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