Nicholas Colas, Columnist

Don't Worry About Those Weak Third-Quarter Earnings

Investors can expect a return to the good times after the short-lived hit to the economy and corporate profits from the recent storms.

October 18, 2017 at 5:07 PM UTC

By Nicholas Colas

Nicholas Colas is the cofounder of DataTrek Research. He is the former chief market strategist at Convergex Group LLC.

Florida is already bouncing back.
Photographer: Chip Somodevilla/Getty Images

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U.S. stocks enter third-quarter earnings season with a strong tailwind. The recent rally caps an already strong year for the S&P 500, which is up 14 percent. Volatility, as measured by the CBOE VIX Index, is at generational lows. There’s even been some healthy sector rotation that benefited laggards such as small caps and financials.

These trends would seem to indicate that markets believe corporate earnings reports will be just fine. After all, why bid up equity prices to 18 times forward earnings if you believe a raft of disappointing results are coming?