The Big Surprise We’ll Get from Public Company Earnings This Quarter86 views 2013-07-10 02:56 Tags: corporate continue blank getting returns
With corporate earningsseason about to begin, many investors are anxiously awaiting the results to see if the S&P 500 can continue its strong showing.
Naturally, with the index showing such outsized returns over the past six months, many investors are getting nervous. And the investors who have been left on the sidelines are waiting for some signal indicating whether to get into the market at the current level or wait for a larger pullback.
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One worrisome sign for the S&P 500 is that the forecast for the corporate earnings growth rate has continued to come down. According to FactSet, a global leader in financial information research, the current estimate for the corporate earnings growth rate during the second quarter of 2013 is just 0.7%. This is a significant drop since March 31, 2013, when the estimate for the corporate earnings growth rate during the second quarter was 4.2%. (Source: “Earnings Insight,” FactSet Research Systems Inc. web site, July 5, 2013.)
That news might confuse some investors, because the S&P 500 is still near its all-time highs.
I believe that a dichotomy has been generated by the investors’ reactions to the easy monetary policy stance by the Federal Reserve. When the Federal Reserve began discussing the possibility of reducing its asset-purchase program last month, sellers then emerged and impacted the S&P 500.
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