Yesterday morning there were 75 stocks that reported earnings, and on average, these stocks declined 2.24%. That’s an extremely negative number when considering the fact that the S&P 500 only declined 38 basis points on the day. Below is a look at the average one-day performance of stocks reporting earnings by day this earnings season. As shown, the two biggest days for earnings so far have been 10/20 (last Thursday) and 10/25 (yesterday), and on both of these days, the stocks that reported averaged declines. Overall, the average one-day change for all stocks that have reported since earnings season began is now negative at -0.36%. Before yesterday, that average stood at +0.20%, so yesterday we saw a major shift in investor sentiment. It went from investors being willing to “buy the news” to instead selling the news.
Using our Interactive Earnings Report Database, we looked at all trading days since 2001 where more than 50 stocks reported earnings to see how yesterday’s extreme weakness stacks up. We found that there have only been 30 prior trading days where the stocks that reported earnings that morning averaged a decline of more than 2% on the day. And the large majority of those days also saw the broad market post a big decline as well. On only 7 days since 2001 has the average stock reporting earnings that AM fallen more than 2% while the S&P 500 declined less than 1%. Yesterday made it 8 days. While it wasn’t a bad day for the market, it was a horrible day for the stocks that reported earnings.