Third Quarter Earnings Season is Off to a Good Start

Third quarter earnings season is off to a good start, and we expect the good news from corporate America to continue throughout the reporting season, despite the narratives out there in the media about peak earnings and the risks surrounding the U.S.-China trade dispute. We do not want to be dismissive of the trade risk, and we acknowledge earnings growth is slowing, but we believe the economic fundamentals are healthy enough to offset the impact of tariffs. And there is a long way to go from low- to mid-20s earnings growth rates that we are seeing now to the long-term average earnings growth rate for the S&P 500 Index in the 7–8% range. “We think it’s too early to worry about peak earnings,” notes LPL Chief Investment Strategist John Lynch. “Corporate fundamentals look quite good and the U.S. economy is on solid footing.” Continue reading

Weekly Update – Geopolitics Overshadow Earnings, Economic Data

US: S&P 500 Index +0.0%, Dow +0.4%, Nasdaq -0.6%
Europe: STOXX Europe 600 +0.6%, German DAX +0.3% France CAC 40 -0.2%, U.K. FTSE 100 +0.4%
Asia: Japan Nikkei -0.7%, China Shanghai Composite -2.1%, Korea KOSPI  -0.3%
Rates/Commodities: 10-Year Treasury yield +4 basis points to 3.19%, WTI crude oil -3.8%, COMEX gold +0.6%

So far, October continues to live up to its reputation for being a volatility-laden month, with stocks again failing to sustain early-week gains as investors mostly shrugged off a strong start to third-quarter corporate earnings season in the U.S., which is thus far tracking to grow 19.4% year over year. Continue reading