Earnings Estimates Are Wild Guesses, But Still Swinging Stocks
- Stocks rise 2.2% on beats, fall 4.8% on misses: Credit Suisse
- Volatile reporting season expected amid information vacuum
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Analysts may have struggled to predict the impact of coronavirus on corporate results but old habits are hard to break in the stock market and their forecasts are, as usual, driving reactions to earnings reports.
With nothing better to go by, investors are rewarding companies that beat predictions and punishing those that miss. Corporate profits have been dire, with some companies seeing earnings drop more than 50%, but what’s mattered more for stock prices has been how they’ve stacked up to forecasts.