SP 500 Earnings: Still Firming Up but SP 500 Couldn’t Close Above July ’23 High

There’s nothing wrong with the trends in SP 500 earnings data, at least what’s tracked weekly at Refinitiv, since the numbers continue to firm.

Unfortunately, the SP 500 couldn’t close above it’s July 23 ’23 high of 4,607.07, closing this week at 4,604.37.

SP 500 data:

  • The forward 4-quarter estimate fell $0.15 this week to $236.26 from $236.41;
  • The PE ratio ended the week at 19.5x;
  • The SP 500 ended the week at 5.13%, still at the lower end of the preferred range, meaning the SP 500 still looks rich or fully valued;
  • This coming week we get quarterly earnings from Oracle (ORCL) Monday night, December 11th, Adobe (ADBE) reports Wednesday, December 13th after the close, and then Costco (COST) and Lennar (LEN), on Thursday, December 14th, after the close.


This excel table shows the full-year 2023, 2024 and 2025 SP 500 EPS estimates. The expected growth rates are +2%, +11% and +12% respectively for 2023 – 2025.

Even with pressure on Q4 ’23 bottom-up EPS, calendar 2024 has yet to change very much, and companies are starting to leak out their calendar ’24 guidance.

Let’s put it another way, if there is a problem in 2024, I don’t think it will be earnings related, but still bond-market related or interest-rate driven.

Maybe the whole earnings-related discussions are pointless, since the tech sector EPS growth in 2023 is just 7%, and yet the sector is up 49.97% YTD as of 12/1/23. In 2019, with Jay Powell cutting the fed funds rate, the SP 500 rose roughly 30% on zero SP 500 EPS growth (talk about PE expansion).

Looking at expected SP 500 EPS sector growth rates for 2024, the tech sector’s EPS growth is expected to rise from 7% in ’23 to +15.8% as of 12/8/23.

Summary / conclusion: Oracle’s conference call will be interesting after the bell on Monday, December 14th. This blog will have an earnings preview on ORCL over the weekend. Margins have been under pressure thanks to the Cerner acquisition. Guidance tanked the stock after the August ’23 quarter reported in September.

With worries about Walmart and “deflation”, Costco’s quarter on Thursday night will get some interest. Costco is a juggernaut. They execute regardless of the macro. What a brand, but it’s always fully-valued.

Recent jobless claims and this morning’s November jobs report shows the US economy still slowly decelerating, but not enough to send SP 500 EPS off a cliff (at least not yet). With Oracle and Adobe and Lennar and Costco this week, and then Nike and Fedex and Accenture and Micron in coming weeks, readers will get a nice cross-section of the US economy that is driving this market.

Don’t forget the November CPI and PPI due Tuesday and Wednesday next week. The drop in crude oil has been very helpful for the overall indices. Gasoline – at least in Illinois the last week – is $3.16 a gallon (at Costco), the lowest since Christmas week of 2022, when it was $3.00 to $3.05.

Technically speaking, the SP 500 needs to trade above that July ’23 high of 4,606.07 and then run towards the all-time-high at 4,795 – 4,800 to support the bull’s case. The SP 500 price targets for 2024 seem awfully bearish today.

Take all this with substantial skepticism, and a considerable grain of salt. None of this is advice or recommendation. Past performance is no guarantee of future results, and investing can involve the loss of principal. Capital markets can change quickly for both the good and the bad. Assess your own comfort with your portfolio volatility and adjust accordingly.

Thanks for reading.



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