S&P 500 Earnings Growth Hits 47.4%, Best Since 2021
The S&P 500 Index made a modest recovery in the last two consecutive days, reaching a high of 7,490, a few points below the all-time high of 7,616. This recovery happened after the Federal Reserve delivered a relatively hawkish interest rate decision. Officials left rates unchanged at 3.50% and 3.75%, with three officials voting to hike. S&P 500 Index Jumps as Earnings Growth Surges Most notably, the index recovered as the earnings season gained momentum, with four Magnificent Seven companies publishing their numbers. FactSet (NYSE: FDS ) data shows that 61% of the companies in the S&P 500 Index have reported their quarterly earnings. Aggregate earnings growth has reached 47.4%, significantly exceeding analysts’ initial estimate of 32%, highlighting another stronger-than-expected earnings season. Most companies have published strong numbers. Top banks like JPMorgan (NYSE: JPM ),...
The S&P 500 Index made a modest recovery in the last two consecutive days, reaching a high of 7,490, a few points below the all-time high of 7,616.
This recovery happened after the Federal Reserve delivered a relatively hawkish interest rate decision.
Officials left rates unchanged at 3.50% and 3.75%, with three officials voting to hike.
S&P 500 Index Jumps as Earnings Growth Surges Most notably, the index recovered as the earnings season gained momentum, with four Magnificent Seven companies publishing their numbers.
FactSet (NYSE: FDS ) data shows that 61% of the companies in the S&P 500 Index have reported their quarterly earnings.
Aggregate earnings growth has reached 47.4%, significantly exceeding analysts’ initial estimate of 32%, highlighting another stronger-than-expected earnings season.
Most companies have published strong numbers.
Top banks like JPMorgan (NYSE: JPM ), Morgan Stanley (NYSE: MS ), and Citigroup (NYSE: C ) released strong numbers, boosted by high interest rates and investment bank revenue.
Trading revenue soared, while dealmaking boosted their performance.
Read Also: Top Four Nasdaq 100 Stocks to Watch Next Week: AMD, Uber, Palantir, Airbnb Big-tech companies like Amazon (NASDAQ: AMZN ) and Microsoft (NASDAQ: MSFT ) published strong numbers.
Amazon stock soared by over 15% on Friday, while Microsoft had the best day on Thursday.
All these companies released strong metrics, helped by their cloud computing divisions.
For example, Amazon’s AWS revenue jumped by 37% YoY, while Azure grew by 42% during the quarter.
Energy companies have also released strong metrics, with ExxonMobil (NYSE: XOM ) saying that its adjusted earnings rose by 67% to $14.7 billion.
Oil and gas companies have done well because of the rising oil and gas prices.
More companies will release their earnings in the coming weeks.
Berkshire Hathaway, Palantir, Vertex Pharmaceuticals, Advanced Micro Devices, Caterpillar, Eli Lilly, and AppLovin will publish their numbers next week.
S&P 500 Still Trading at a Bargain Interestingly, despite the revenue growth, there are signs that the S&P 500 Index is trading at a bargain.
FactSet data shows that the index is trading at a forward price-to-earnings ratio of 19.6, which is lower than the five-year average of 19.9.
This multiple is slightly above the ten-year average of 19.
The cheaper valuation is coming at a time when earnings growth is accelerating.
Indeed, some of the fastest-growing companies are also trading at bargain prices.
For example, Nvidia (NASDAQ: NVDA ), which is growing at over 80%, has a forward price-to-earnings ratio of 20.
Micron (NASDAQ: MU ) also has a forward multiple of less than 20.
These metrics explain why most analysts are bullish on the S&P 500 Index.
Goldman Sachs sees its forecast to 8,000, while Wells Fargo hiked to 7,950 points.
Read Also: TLT ETF Outflows Rise as Bond Vigilantes Push US 30-Year Treasury Yields to 5.26% Image: Shutterstock