The Earnings Season Sweet Spot

November 4th Weekly Market Update

Last week marked that special time of year when the World Series brings together two great teams. A three-run double on a hit to the Green Monster off the sweet spot of the bat of Shane Victorino helped the Boston Red Sox emerge victorious in a title-clinching 6 – 1 win over the St. Louis Cardinals in Game 6 of the World Series. The earnings season is also a special time of year with a sweet spot that can deliver game-changing results.

Stocks slid lower from mid-September until the earnings season got underway with Alcoa, the company that traditionally marks the start of the reporting season, which released results after the stock market closed on October 8, 2013. The stock market then turned higher and has since steadily climbed 7%, as about three-quarters of the S&P 500 companies reported results for the third quarter of 2013.

Despite all the focus on the travails in Washington, it was earnings that market participants appeared to focus on most closely this October. The earnings news has been good; so far, about 70% of companies have reported earnings above analyst expectations. This is higher than the long-term average of 63% and is above the average over the past four quarters of 66%.

For the full article: The Earnings Season Sweet Spot