After preparing for the worst, Wall Street received a pleasant\nsurprise in the current earnings season. Instead of the start of a slump in\nearnings, corporate profits are now expected to be steady and to be slightly\nhigher in the first three months of the year.<\/p>\n\n\n\n
With the current earnings reporting period, earnings estimates\nwere reduced from 5% positive growth on January 1st to 3% negative in the\nearnings period. “That’s the sharpest cut that we’ve seen since the first\nquarter of 2009, which obviously was a very different economic environment than\nwhat we’re in now,” Wall Street economists said.<\/p>\n\n\n\n
More than a third of the S & P 500 companies have reported\ntheir earnings so far. Of these companies, 78% exceeded earnings estimates\nwhile 56% exceeded sales forecasts.<\/p>\n\n\n\n
“We’ve seen technology companies as well as consumer staples\ncompanies and communication services companies, their numbers have been coming\nin the best so far. You’re seeing the biggest moves there.” analysts said.<\/p>\n\n\n\n
They added that superior performance in staples stocks is\nparticularly positive for the rest of the market. 86% of the companies\nreporting so far had better-than-expected results for the end result. Analysts\npointed out that the top line is in very good condition.<\/p>\n\n\n\n
The staples companies are actually able to pass price increases\nto the consumer, which is a great thing for the consumer. According to\nanalysts, consumers are “still feeling very strong in the wake of\ncommodity prices rising, transportation costs rising,\u201d<\/p>\n\n\n\n
Even with the surprise of the first quarter, management teams and\nWall Street analysts seem to have underestimated their estimate for the second\nquarter as well.<\/p>\n\n\n\n
“The numbers keep coming down. You saw Q2 estimates cut\nsharply over the last three or four months, but as earnings season has started,\nthe numbers have been cut in half again from about an increase of 0.3% to half\nof that now\u201d, analysts declared. “What that says about the market right\nnow is that there’s still a lot of caution out there between management teams,\nbetween Wall Street analysts. No one is certain that we’ve cleared the bar just\nyet.\u201d<\/p>\n\n\n\n
Analysts expect second quarter profits to be much better than the\nexpected increase of 0.15%. Their forecast for earnings growth is 3% to 4% for\nthe S & P 500 between April and June.<\/p>\n","protected":false},"excerpt":{"rendered":"
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