It's Gut Check Time for the Stock Market's Bulls
It’s been bad for the FAANGs. But lots of other companies have reported robust earnings. What’s next?
The money has been rolling in.
Photographer: Bloomberg
It seems all anyone in the equities market wants to talk about these days is the carnage underway in the so-called FAANG stocks: Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc. And it has been ugly. A New York Stock Exchange index tracking these and a few other technology-related stocks posted its worst three-day performance since 2015 by falling as much as 9.75 percent – dragging global markets down as well.
But focusing on a handful of high-profile stocks obscures what is turning out to be a boffo earnings season.
Members of the benchmark S&P 500 Index are on track to report second-quarter earnings gains of 25 percent on average, the best performance since the final three months of 2010, according to Bloomberg Intelligence. Excluding the biggest tech stocks, BI notes that the gains are even more impressive, up 37 percent. Overall, a record 85 percent of U.S. companies have beat expectations with earnings season only halfway over, according to Bianco Research, citing Factset data. What may be more surprising is that a review of 159 earnings conference call transcripts through July 25 found low levels of concern over tariffs, according to Bianco. Only 19 of them, or about 12 percent, saw "at least" a modest impact from tariffs; 17 worried about the future impact of tariffs. On about 83 percent of the calls, company executives either saw no reason to mention tariffs or mentioned them and concluded they are having no effect on earnings.