Fourth Quarter Earnings Boom

Fourth Quarter Earnings Boom

March 01, 2021
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Here Comes The Earnings Boom

LPL Research reviews an incredible earnings season and speculates on a potentially strong earnings rebound for 2021 and beyond. Find out more in today’s Weekly Market Commentary, available at 1 p.m. ET.

Daily Insights

US stocks open higher after last week’s bond market volatility subsides

  • Europe’s Stoxx 600 Index rises the most in three months
  • Asian markets strong overnight with Japan’s Nikkei leading the pack

S&P 500 Index earnings season ending better than expected

Earnings season wrapping up, blows by expectations

  • S&P 500 Index earnings growth for the fourth quarter is tracking to a 3.8% year-over-year increase, roughly 13 percentage points above prior expectations.
  • Earnings estimates for 2021 have impressively increased 4% year to date since January 1.

View enlarged chart.

Technical update

The S&P 500 Index is rallying off the 50-day moving average early in trading today, after closing just 3 points above it on Friday. Important to watch today will be breadth, and we will be looking to see broad numbers of stocks participating in the rally.

This week’s events:

  • Monday—Construction spending (Jan.), Markit’s Purchasing Manager’s Index (Feb.), Institute for Supply Management (ISM) manufacturing report (Feb.).
  • Wednesday— Markit PMI Services (Feb.), ISM Services report (Feb.), and ADP Employment (Feb.), and Auto Sales.
  • Thursday—Weekly initial unemployment claims, productivity (Q4), durable and factory orders (Jan). Fed Chair Jay Powell speaks.
  • Friday—Payroll employment (Feb.), trade balance (Jan.), consumer credit (Jan.).
  • We wrap up Q4 earnings season with 11 S&P 500 companies reporting results.

COVID-19 news

The United States reported 51,000 new COVID-19 cases on Sunday, down 9% from a week ago as the weather-related distortions that caused a slight rebound last week have abated (source: Johns Hopkins).

  • The number of patients currently hospitalized with COVID-19 has fallen to the lowest level since October 2020.
  • Western Europe continues to battle rising cases of the B117 variant of the virus.
  • The Food and Drug Administration officially approved the Johnson & Johnson vaccine for emergency use authorization.

Why Sustainable Investing is Sustainable

Chief Market Strategist Ryan Detrick, Equity Strategist Jeffrey Buchbinder, and guest speaker Jason Hoody, Head of Investment Manager Research discuss why sustainable investing is a major trend that isn’t going away & its positive environmental, social, and ESG impact with financial return. We also explore the strong earnings season and recent retail sales in this week’s Market Signals podcast.

 

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index and market data are from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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