Earnings Repeat Role as Market Elixir as Results Fan Stocks Anew

  • Stocks have risen every quarter since 2013 in earnings season
  • S&P 500’s 1.3 percent rise this season is half the average

What Will a Dow 20,000 Mean for Investors?

For the 17th straight quarter, earnings from U.S. companies are providing an antidote to paralysis in the stock market.

The S&P 500 Index surged to a record Wednesday and the Dow Jones Industrial Average jumped past 20,000 as results from Boeing Co. to Seagate Technology and Huntington Bancshares Inc. surpassed analyst forecasts. Profits in the S&P 500 are on pace to rise at the fastest pace in two years, welcome relief for investors facing the highest valuations since the aftermath of dot-com bubble.

The S&P 500 has advanced 1.3 percent since the reporting season began three weeks ago, as 77 percent of companies beat estimates. The benchmark has posted gains over the six-week earnings stretch every quarter for four years, posting an average advance of 2.7 percent, data compiled by Bloomberg show.

  • All 11 industry groups have reported positive profit surprises, except for phone-service providers; energy and technology companies led the pack, with a beat ratio of at least 6.4 percent, data compiled by Bloomberg show
  • Earnings expanded 6.3 percent among companies that have announced results, a rate that if sustained would make this quarter the best since September 2014
  • Technology shares showed the most positive reactions to earnings surprises, with the group rising an average 1.9 percent on the first day post announcement
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