Corporate Earnings Ease Worries Over Economy
The stock market has rallied due to corporate profits beating investor expectations, according to The Wall Street Journal.
According to FactSet, 75 percent of the 342 companies in the S&P 500 beat their earnings expectations. This figure beat the five year average of 72 percent. Although these reports beat expectations, earnings are expected to decline for the third consecutive year.
Overall profits are expected to decrease 2.7 percent this year, which analysts predict will hit a support level and allow earnings to grow next year. Earnings are expected to rise 5.8 percent and 6.9 percent for the first and second quarters.
Although, it is not unusual for companies to beat expectations since many expected worse results which lowered overall expectation. Regardless, the recent earnings have helped catapult the S&P 500 to an all-time high, after a slow three months.
“The fears of a recession have been high for the past six to nine months,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management. “Earnings have certainly helped put some of that to rest.”
Corporations beating their earnings expectations has helped investor worries over the future of the economy and pushed the S&P 500 index to record highs.