Earnings season moved into the heart of the schedule last week, with 89 S&P 500 companies reporting. Despite the overall earnings picture deteriorating, the S&P 500 rose by almost 2.5% for the week. The better-than-expected fourth-quarter GDP growth did lift hopes that the economy might avoid recession in 2023. According to FactSet, 69% of companies have exceeded earnings estimates, below the 10-year average of 73%. This week is the busiest of the earnings season, with 109 S&P 500 companies scheduled to report.
Blended earnings, which combine actual with estimates of companies yet to report, are lower than forecasts at the end of the quarter and deteriorated again last week. The high earnings growth rate for the industrials remains misleading since the airlines reported a loss in the fourth quarter of 2021 and should post a profit this quarter. While the index-level earnings picture worsened, several sectors saw improving expectations last week. Four sectors, consumer staples, real estate, health care, and materials, are expected to post higher earnings than forecasted on December 30th. The energy sector retains the crown with the highest expected growth rate driven by increased energy prices, with expected earnings slated to increase by 59% year-over-year. On a related note, Berkshire Hathaway
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