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“You never really know a stock until you own it.” – Walter J. Schloss
The half-life effect of headlines suggesting better odds of a stimulus deal has been shrinking. Yesterday, the positive impact was already erased by midday, and headlines overnight provided another lift to futures this morning, but most of the gains have already been given back. Providing another boost, though, is the latest data on Housing Starts and Building Permits.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, economic data out of Japan and China, trends related to the COVID-19 outbreak, and much more.
For the last four months, the trend of stock price reactions to earnings has been steadily positive but drifting lower on a three-month rolling basis. Through yesterday, the median one-day reaction to earnings for stocks reporting over the last three months has been a gain of 0.06%, which is 0.07% above the long-term average of a 0.01% decline. This earnings season is less than two weeks old, but unless things change quickly, it won’t be long before the median one-day reaction flips negative.
Not including earnings reports after the close yesterday or so far this morning, we have seen a total of 45 companies report earnings since the start of last week. Of those companies, 80% have topped EPS forecasts, 73% have exceeded revenues estimates, and 11% have raised guidance. Overall, those are pretty healthy numbers. Don’t tell the stocks of the companies reporting that, though. In response to the better than expected results, companies reporting have declined an average of 1.06% on their earnings reaction day, and only 14 have finished the day in the black. It’s still early in earnings season, but if this trend continues, it’s going to be a long earnings season.
