Market Overview

V-Shaped Recovery Looking More Likely As Corporate Profits Show Resilience

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V-Shaped Recovery Looking More Likely As Corporate Profits Show Resilience

U.S. markets in the week ahead could see a bounce after Friday's modest drop, as the country settles into the post-election period.

Earnings Resiliency: Although new record COVID-19 numbers could drag share prices, corporate earnings have proved surprisingly resilient, giving momentum to expectations of a V-shaped recovery, The Wall Street Journal reported
The performance of companies like Microsoft Corp. (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOG) and Facebook Inc. (NASDAQ: FB) has helped, but the positive results are not limited to tech.
"The earnings beats are widespread, with 86% of reporting S&P 500 companies having exceeded estimates. Analysts have lifted third-quarter expectations for all 11 S&P 500 sectors," WSJ reported.

Markets were up across the board over the last week, despite news of rapidly rising COVID-19 cases. A firm outcome over the weekend on the election removes one lingering element of uncertainty hanging over the markets.

What's Next: The interplay between the pandemic and the resiliency of corporations could determine how high the markets go in the weeks and months ahead. One factor that could hamper things is a potentially rough transition in the White House.
WSJ reported that analysts expect to see an 11% year-on-year frop in earnings in the fourth quarter, before then rising in the first quarter of 2021.

Meanwhile, keep an eye on the week beginning tomorrow as the country returns its focus back to business.
McDonald’s Corp. (NYSE: MCD), Walt Disney Co. (NYSE: DIS) and Cisco Systems Inc. (NASDAQ: CSCO) are to report earnings during the week.

The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) was at $283.85, up 0.22% in Friday's after hours trading. The SPDR S&P 500 ETF Trust (NYSE: SPY) was up 0.24% at $351.

 

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