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S&P 500 Earnings
With first quarter earnings season in the ninth inning, 78% of the reporting S&P 500 companies have outperformed expectations. That beats the 10-year average of 73%. But hold your horses, there’s a twist:
Normally, at least over the past five years, when companies beat their earnings expectations, their stocks jumped an average of 1%. But this quarter we’re seeing a meager 0.3% bump, on average. And brace yourselves, because stocks falling short are getting a rough 4.1% price drop compared to the -2.2% five-year average.
So what’s the deal?
Well, it seems like expectations were so low that beating them became as predictable as a Monday morning coffee craving. And when companies disappointed, they were treated like a soggy sandwich. Ouch!
But fear not! There’s a silver lining. Estimates for the second half of the year are looking up, and fewer companies are grumbling about inflation. So, while markets may still have issues to work through, we’re watching for signs of balance as the year progresses.
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