Strong Early Earnings Fail to Ease Investors' Nerves
Early results from the third-quarter earnings season haven't provided much comfort to jittery investors. ![]()
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So far, fewer companies than usual are beating Wall Street's earnings expectations. With about 20% of companies in the $S&P 500 Index (.SPX.US)$ having reported third-quarter results, 72% have topped analysts' consensus earnings estimates, according to FactSet. That is below the five-year average of 77%.
Investors are also punishing corporations that miss the mark. Shares of S&P 500 companies that have underperformed Wall Street's earnings expectations have slipped 4.7% on average in the two days before their report through the two days after, according to FactSet. That compares with the five-year average of 2.2%.
Going into this earnings season, it's all about the macro.”
—— said Larry Adam, chief investment officer of Raymond James.
Investors are awaiting the latest readings on inflation and the economy for signs the Federal Reserve could be ready to slow the pace of its monetary tightening soon. The central bank's preferred inflation gauge is slated for release next week, as are preliminary figures for third-quarter gross domestic product.
The Fed is set to raise interest rates by another 0.75 percentage point at its next meeting in November, but policy makers are considering a smaller half-point increment in December, The Wall Street Journal reported Friday. That helped boost stocks—the S&P 500 jumped 2.4% Friday, notching a weekly gain of 4.7%.
Source: FactSet, THE WALL STREET JOURAL
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