Puzzling Market Reaction to Robust Earnings Season

The Q2 earnings season has not only surpassed Wall Street’s expectations but has also outpaced the long-term historical average, indicating a robust quarter for American companies.

The latest data unveiled by FactSet Research Systems Inc. FDS, a financial data and software company based in Norwalk, Connecticut, reveals that an impressive 79% of S&P 500 companies reported actual EPS above the Street’s mean forecast, surpassing both the 5-year and 10-year averages of 77% and 73%, respectively.

Equally encouraging is the magnitude of the earnings beats. Overall, earnings have exceeded estimates by 7.2%, slightly lower than the 5-year average of 8.4%, but higher than the 10-year average of 6.4%.

However, despite these positive earnings surprises, the reaction in the stock prices of these companies has been quite unexpected.

Interesting article and FactSet suggests the high PE ratio along with the over valuation of stocks is the driving force for this response to the positive earnings we are seeing…doc


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Sorry, I didn’t realize that this was behind my login. This is a free account fyi…doc

Phony Data Lured Investors Into A Bull Trap | ZeroHedge

Here’s a good article for those bearish about this market. They present some strong evidence to support the argument about a recession…doc

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That is good. At the same time I would also like to see a measure of how much (and in what direction) EPS estimates were adjusted in the weeks before earnings were released.


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Yahoo’s finance page, for a given stock, under the “analysts” tab, gives the trend of estimates for future quarter and year.

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Hmm, the evidence is number that come out of black box that you need to buy their newsletter to see. I doubt they have any actionable information that others don’t have.


Now we need some aggregate measure of those changes to compare to the total percent beating estimates.


This is a free site, you can create an account for free if you want…doc