Stocks opened higher. The S&P 500 opened higher this morning as markets remain fixed on the COVID-19 headlines, oil prices, and earnings season. President Trump will sign the $484 billion COVID-19 relief bill into law today. Oil prices are higher but remain below $20 per barrel, based on June settlement of the futures contract. Today’s economic calendar includes durable goods orders for March and University of Michigan Consumer Confidence, which will provide more stark evidence of the depth of the economic downturn.
What do earnings look like in recession? Perhaps the most important question this earnings season is how far 2020 earnings might drop. Historically, declines of 20% or more during recessions are not uncommon. With so many companies pulling guidance and the lack of clarity around the timing of the re-opening of the economy, current consensus estimates calling for a 15% decline in S&P 500 profits this year may prove overly optimistic. We discuss this more today on the LPL Research blog.
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