That\u2019s why it is meaningful that earnings were barely\nmentioned in the news. Even though earnings took a huge hit in Q2 \u2013 total\nearnings (or aggregate net income) for the 458 S&P 500 members that have\nreported are down -35.4% on -11.3% lower revenues \u2013 corporations largely\nperformed better than<\/em> most analysts\nand even CEOs expected<\/em>.1<\/sup> <\/p>\n\n\n\n As I write, 79.7% of reporting companies beat consensus\nearnings-per-share estimates and 62.9% beat revenue estimates. On a blended\nbasis, 55.7% of companies exceeded expectations, which represents a very strong\nshowing relative to recent history:2<\/sup><\/p>\n\n\n\n ______________________________________________________________________________________________<\/sup><\/p>\n\n\n\n In Addition to Earnings, What Other Data Should You Be Watching?<\/a> So instead\nof focusing on the \u201cwhat if\u2019s\u201d that saturate the media, I recommend focusing on\nthe fundamentals and hard data. To help you do this, I am offering all readers\nour just-released Stock Market Outlook report. This report contains some of our\nkey forecasts to consider such as:<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0 ___________________________________________________________________________<\/p>\n\n\n\n To be fair, analysts were totally in the dark\nas they set their Q2 earnings-per-share and revenue estimates. As we all know,\nmost companies withdrew previously issued guidance given how difficult it was\nproject business trends during the period because of the pandemic. Everyone was\nventuring into the unknown. <\/p>\n\n\n\n In my view, however, the tendency to assume\nworst-case scenarios led to analyst and CEO projections that were far too dire.\nWhen the \u2018worse than the Great Depression\u2019 forecasts did not materialize,\nstocks rallied. This is often how markets work.<\/p>\n\n\n\n Importantly, the realization that the economy and corporate\nearnings outlook may not be as bleak as expected is extending to the current\nperiod (Q3 2020) and beyond. As you can see in the chart below, Q3\nearnings growth estimates for the S&P 500 index have been gradually\nimproving week to week, getting better in tandem with a slowly \u2013 but steadily \u2013\nimproving economic growth picture since the start of July. We have been seeing\na similar trend take place for Q4 2020 and full-year 2020 estimates as well.<\/p>\n\n\n\n This is a notable improvement in the overall\nearnings picture since the start of the pandemic, and is in-line with high-frequency\nmacroeconomic data showing a similar improvement in the economy\u2019s growth\ndrivers. Recent readings in retail sales, initial jobless claims, and factory\nactivity have all shown steady momentum. Again, the point is not to say the\neconomy is humming again \u2013 it isn\u2019t. But are the economy and U.S. corporations\nholding up just slightly better than many anticipated? I think the data above\nsuggests the answer is yes. <\/p>\n\n\n\n Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n Weak economic data is likely to persist for\nmonths or maybe even quarters to come, as the pandemic continues to deliver\nheadwinds on growth. But in my view, equity investors should be less focused on\nthis nearer term economic data and more focused on where corporate earnings and\nthe economy are likely to be a year from now, or even by the end of 2021. No\none can know the answer for sure. But if I was asked if the economy and\nearnings are likely to be stronger and better than many people expect as of\ntoday, I\u2019d say the answer is yes. Sometimes \u201cbetter-than-expected\u201d is all that\nmatters. <\/p>\n\n\n\n
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It can be easy to get caught up in the headlines that focus on attention-grabbing topics like the Covid-19 outbreak, unemployment data and politics. But there are many other important factors impacting the markets like earnings that you should be keeping an eye on. <\/p>\n\n\n\n
IT’S FREE. Download the Just-Released September 2020 Stock Market Outlook<\/a>3<\/a><\/sup><\/strong><\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/motm_08172020-1.png\")
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