The doom and gloom that prefaced this earnings season could be clearing to reveal a rainbow of epic proportions, and some are predicting that markets could have the best week ever this week as the bulk of S&P 500 companies announce their results.
Both the S&P 500 and the Dow finished last week only 1% away from record-breaking highs and if the stars align in the coming days, it could be very profitable week.
Both the S&P 500 and the Dow are nearing all-time highs. | Chart: Yahoo Finance
Last week the banking sector offered a solid performance, which has hyped the market up for an unexpectedly pleasant Q3. This week, 24% of the S&P 500 companies will report Q3 results with some of the biggest names on the docket. Macroeconomic events in the coming week could further inflate the growing optimism on Wall Street, which would create the perfect storm to push the Dow and S&P 500 skyward.
Nowhere to Go But Up
While the pundits may be building up enthusiasm about the week ahead, it’s important to note that this quarter the bar has been set exceptionally low. FactSet estimated that earnings among S&P 500 stocks would decline by 4.6% in the third quarter. Most were expecting trade tension and macroeconomic conditions to cast a shadow over results, but so far it appears that U.S. firms are more resilient than analysts gave them credit for.
Of course, there’s a chance the rosy picture that banks painted last week is the end of the story. After all, an S&P Global Market Intelligence poll suggested that the financial sector would be the second-best performing segment this earnings season. If that’s the case,