Monday, 14 November 2016

US earnings recession over

The Wall Street Journal reports that the US earnings recession is over.

With more than 90% of S&P 500 companies having reported results for the latest quarter, earnings for the biggest U.S. companies are finally growing again. Third-quarter adjusted earnings are projected to increase 2.9% from the same period a year ago, according to FactSet. That marks the first year-over-year growth rate after five consecutive quarters of contractions.

The WSJ further reports that earnings growth this quarter is expected to improve to 3.5 percent followed by 11.4 percent and 10.5 percent in the first two quarters of 2017.

In another report, Bloomberg notes that among the nine instances since 1936 when companies emerged from an extended streak of profit declines, stocks posted gains in all but two, with the S&P 500 rising an average 12 percent over the following year.

On the other hand, Bloomberg does point out that the economy is "already showing signs of wobbling" while the WSJ points out that with stocks already near records, "there is no guarantee companies will be rewarded by investors" even if earnings keep rising.

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