Mixed Bag of Fourth-Quarter Earnings: A Mixture of Positive and Negative Developments

As we dive into the fourth-quarter earnings season, investors are faced with a mixed bag of news. Earnings estimates for the S&P 500 have taken a hit, with a considerable drop from an expected gain of 11% on October 1 to 4.4% today. This decline is primarily led by significant drops in the health care and financial sectors, along with industrials.

However, there is a silver lining to this cloud. The lowered bar for many corporations in these sectors means it will be easier for them to beat and surprise analysts. Additionally, the largest tech stocks are expected to report strong earnings, contributing to a 56% year-over-year growth in EPS for the fourth quarter.

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Despite early filers reporting lower-than-expected revenues, there is optimism in the air. Of the 29 companies in the S&P 500 that have announced earnings so far, an impressive 93.1% have exceeded analyst estimates. This significantly surpasses the long-term average of 66.6%.

Looking ahead to 2024, the S&P 500 is banking on earnings expansion to drive growth. Expectations are set for an earnings gain of 11% in 2024, with technology, health care, financials, and consumer discretionary sectors leading the charge.

While there are concerns about lower revenue growth potentially impacting earnings, analysts remain cautiously optimistic. Despite potential challenges, there is always room for surprises during earnings season. Experts are predicting strong beats for the S&P 500 this season, emphasizing the resilience and adaptability of the market.

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As we navigate through earnings season, it’s clear that investors are poised for an interesting ride in the weeks ahead. Stay tuned for more updates and insights on the ever-evolving financial landscape.

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