More than 2,400 companies have reported third quarter earnings so far this season. Below we highlight average stock performance by sector on “earnings reaction days” so far this reporting period. Remember, the “earnings reaction day” is the first trading day after a stock reports earnings — for a stock that reports after the close, its “earnings reaction day” is the following trading day. For a stock that reports before the open, its “earnings reaction day” is that trading day.
As shown, the average earnings-reaction-day change for all 2,400+ stocks that have reported is actually negative at -0.08%. This means that the average stock that has reported this season has fallen in reaction to the news. The reason it’s negative is because of four sectors whose stocks have reacted very poorly to earnings reports this season — Materials, Consumer Discretionary, Utilities and Consumer Staples. Given that Materials and Utilities combined make up less than 6% of the market, it’s really the two Consumer sectors that have been big disappointments. Regardless of how strong or weak the actual earnings numbers have been, investors have been unloading Consumer stocks in the immediate aftermath of their earnings reports this season.
On the positive side, Technology has been this earnings season’s big winner. The average Tech stock that has reported has gained 1.49% on its earnings reaction day.
We’ll be sending Bespoke Premium subscribers a more detailed summary and analysis of the third quarter reporting period tomorrow. Click here to start a free Bespoke Premium trial.