Market Overview

5 Takeaways From A Surprisingly Strong Earnings Season

5 Takeaways From A Surprisingly Strong Earnings Season

While second-quarter earnings for S&P 500 companies are down 33% year-over-year, 82% of companies reporting have exceeded analyst expectations, the highest percentage in FactSet’s tracking history.

Q2 Takeaways: LPL Research analyst Jeffrey Buchbinder recently discussed the blowout second-quarter earnings season and highlighted a handful of takeaways for investors: 

  • Earnings losses are highly concentrated. The consumer discretionary, energy, financial and industrial sectors alone have accounted for 100% of the year-over-year S&P 500 earnings declines. 
  • Growth stocks have outperformed during the pandemic. Earnings among Russell 1000 Growth Index stocks are up 4% compared to a year ago, while earnings among Russell 1000 Value Index stocks are down 40%.
  • Guidance has been surprisingly good. Since the end of the second quarter, the average analyst forward earnings estimate for the S&P 500 is 1.4% higher. 
  • Economic data is finally trending in the right direction. The Citi Economic Surprise Index and a similar metric calculated by Bloomberg are near multi-decade highs, suggesting recent economic data has been much better than expectations.
  • A weak dollar is good news. The U.S. Dollar Index has dropped 5% since the end of the second quarter, which should be a tailwind for U.S. companies that generate international revenues.

With earnings season winding down, Buchbinder said attention will likely shift to the upcoming presidential election. For now, LPL has a year-end S&P 500 target of 3,300, roughly 2.9% below its current level.

“While 3,300 on the S&P 500 may look pessimistic at this point for a year-end S&P 500 fair-value target, we do not want to send a signal to investors to be more aggressive with equities in portfolios at this time,” he said.

Benzinga’s Take: Things may be looking better for the economy than they did back in late March, but there is still a lot of uncertainty out there for the S&P 500 to be trading at all-time highs. With the SPDR S&P 500 ETF Trust (NYSE: SPY) ETF already up 52.1% from March lows, near-term risk may be skewed to the downside.

Related Links:

Is Buffett Selling Banks, Buying Gold A Warning Sign For Investors?

10 Rookie Mistakes New Investors Should Avoid


Related Articles (SPY)

View Comments and Join the Discussion!

Posted-In: Jeffrey Buchbinder LPL ResearchAnalyst Color Earnings News Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

SPOTDeutsche BankMaintains250.0
AMZNDeutsche BankMaintains4,050.0
DOCUBairdInitiates Coverage On280.0
ASOGuggenheimInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at