Better Than Expected Earnings Helps Boost Stock Market

Andrew Wagner

Better than expected earnings from most companies are boosting the stock market to all-time highs.

Investor sentiment regarding the stock market has changed amid better than expected earnings from companies that are giving the stock market new life and driving it to all-time highs, according to The Wall Street Journal.

Last week, the S&P 500 closed at three record highs. The market had been relatively stagnant for the past 3 months, with July being the last time the index reached new highs.

FactSet reported that shares of companies that beat forecasts, on average, rose 2 percent compared to the five year average of 1 percent. Furthermore, shares that missed their forecast averaged a 2.1 percent pullback, compared to the 5 year average of 2.6 percent.

More than 75 percent of the 358 companies in the S&P 500 that reported earnings through Friday has beaten earnings. 66 percent of these companies have risen after releasing positive earnings, signaling a 5 year high.

“We’re seeing little rallies in some of the growth segments and other parts of the market,” said James Ragan, D.A. Davidson’s director of wealth-management research. “Expectations were low for some of the sectors exposed to the overall economy and trade. Some of those fears have really subsided, creating a good quarter.”

The new life in the growth of the stock market can partially be attributed to investor sentiment regarding the health of the U.S. economy becoming more positive than what they have been hearing from analysts in the past few months.

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Economics, Finance and Investing

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