Q3 earnings off to a good start

Saxo

  • S&P 500 earnings in Q3 have so far been better than expected with the technology sector showing almost 10% earnings growth from a year ago. Our view remains positive on Q3 earnings, but there will likely be hiccups here and there in some of the most hyped stocks.
  • We have said repeatedly that the Q3 earnings season is very important because the rebound in equities has priced in a sharp rebound in corporate earnings which are expected to rise 35% q/q. If earnings are not showing a strong rebound, it will be difficult to justify the current levels in equities unless investors get a positive surprise on the fiscal impulse.
  • Based on the 51 earnings releases in the S&P 500 so far for Q3 the revenue and earnings surprise has been positive with especially earnings surprising a lot to the upside. Growth in revenue and earnings is still negative y/y but only -2.7% for revenue and -19% for earnings with the information technology showing +10% y/y growth in earnings in Q3 highlighting the risk appetite for technology stocks by investors. Earnings estimate still suggest that US companies will be back to record earnings by Q3 2021.
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