{"id":13958,"date":"2023-01-27T17:07:31","date_gmt":"2023-01-27T23:07:31","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=13958"},"modified":"2023-01-27T17:07:31","modified_gmt":"2023-01-27T23:07:31","slug":"sp-500-earnings-revisions-becoming-less-negative-megacap-week-top-10-holdings","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=13958","title":{"rendered":"SP 500 Earnings: Revisions Becoming Less Negative (?) \/ Megacap Week \/ Top 10 Holdings"},"content":{"rendered":"<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13959\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723-300x134.jpg\" alt=\"\" width=\"300\" height=\"134\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723-300x134.jpg 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723-1024x458.jpg 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723-150x67.jpg 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723-768x343.jpg 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/Sp500rateofchange12723.jpg 1495w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Rather than bury the lede, this table is catching my interest since it a.) looks at the forward SP 500 EPS estimates, and b.) measures the rate-of-change for said estimates over time.<\/p>\n<p>The 12-week rate-of-change shows the negative EPS estimate revisions becoming less severe, BUT note how sequential and 4-week rates of change the last two weeks have become a little more severe.<\/p>\n<p>Hence, with the mega-caps like Apple, Alphabet and Amazon reporting this coming week, and with Apple not only having the SP 500&#8217;s largest market-cap weight at 6.3% but an earnings weight that&#8217;s likely bigger than it&#8217;s market-cap weight, these earnings matter to the SP 500 EPS revisions.<\/p>\n<p>Apple is the big dog in the yard.<\/p>\n<p>The forward EPS estimate revisions should break one way or the other after this coming week.<\/p>\n<p>Given price action and market breadth, I&#8217;m still leaning positive for the SP 500 to definitely break the downtrend line in place since January &#8217;22.<\/p>\n<p><em><strong>SP 500 data:\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>The forward 4-quarter estimate (FFQE) slid again this week to $225.02 from last week&#8217;s $225.23 and the 9\/30\/22 $230.43;<\/li>\n<li>The PE ratio on the SP 500 jumped to 18x this week after the weekly 2.5% rally, up from the 17.5x last week, and the 15.5x from 9\/30\/22;<\/li>\n<li>The 5.53% SP 500 earnings yield has declined for 4 straight weeks after peaking near 5.86% on January 6th, 2023;<\/li>\n<li>The Q4 &#8217;22 bottom-up estimate slid one single penny this week to $53.26 from $53.27 a week ago. The same estimate was $57.91 on 9\/30\/22;<\/li>\n<\/ul>\n<p><em><strong>One red flag:\u00a0<\/strong><\/em><\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-13963\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-300x101.jpg\" alt=\"\" width=\"300\" height=\"101\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-300x101.jpg 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-1024x345.jpg 1024w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-150x50.jpg 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-768x258.jpg 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723-1536x517.jpg 1536w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2023\/01\/2022and2023sectorgrowthrates12723.jpg 1545w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>This data is updated weekly from Refinitiv&#8217;s This Week in Earnings report.<\/p>\n<p>Note how 2023&#8217;s expected SP 500 EPS growth rate has slid to just 2.8% as of this week.<\/p>\n<p>That 2.8% expected full-year 2023 growth rate is a full 65% decline from 9\/30\/22&#8217;s +7.8% expected growth rate. Obviously, that number is influenced by revisions, so let&#8217;s see what the EPS revisions look like after this coming week.<\/p>\n<p><em><strong>Mega-caps this week:\u00a0<\/strong><\/em><\/p>\n<p>Refinitiv data shows that Apple, Amazon and Alphabet all report after Thursday&#8217;s market close on Thursday, February 2nd, 2023.<\/p>\n<p>Those three companies represent about 10% &#8211; 11% of the SP 500&#8217;s market cap as of last night&#8217;s market close.<\/p>\n<p><em><strong>Top 10 Holdings as of 12\/31\/22 (and &#8217;22 return):\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>Blackrock Strategic Income: -6.23%<\/li>\n<li>RSP (equal-weight): -11.62%<\/li>\n<li>JP Morgan Income Fund: -8.26%<\/li>\n<li>Charles Schwab (SCHW): -1%<\/li>\n<li>Microsoft (MSFT): -27.94%<\/li>\n<li>Schwab money mkt: +1.40%<\/li>\n<li>JP Morgan (JPM): -12.79%<\/li>\n<li>Oakmark International: (OAKIX): -15.65%<\/li>\n<li>Merck (MRK): +48.4%<\/li>\n<li>Barclay&#8217;s AGG: -13.02%<\/li>\n<li>SP 500 index (SPY): -18.17%<\/li>\n<li>EM ex-China ETF (EMXC): -19.56%<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion:<\/strong><\/em> There is a 98% change the FOMC hikes rates by 25 bp&#8217;s at this Wednesday&#8217;s February 1 &#8217;23 announcement, at least as of this morning&#8217;s <a href=\"https:\/\/www.cmegroup.com\/markets\/interest-rates\/cme-fedwatch-tool.html\">CME Fedwatch tool.<\/a><\/p>\n<p>The bigger question i&#8217;m wondering about is can the SP 500 break that downtrend line that every technician been focused on, even with poor SP 500 earnings ? And what wins out in the end &#8211; poor SP 500 earnings or a less hawkish Fed ?<\/p>\n<p>Jay Powell and the FOMC have engineered a softer landing than even three months ago seemed unlikely, with this morning&#8217;s PCE data coming in inline and lower again year-over-year.<\/p>\n<p>Inflation is becoming less of an issue but it&#8217;s not been completely eradicated.<\/p>\n<p>Jay Powell could very well remain hawkish at this week&#8217;s Fed presser.<\/p>\n<p>Take all this with substantial skepticism. It&#8217;s one person&#8217;s opinion and past performance is no guarantee of future results. IBES data by Refinitiv is the source of the earnings data, but the spreadsheets and tables are this blog&#8217;s work. Capital markets can and do change quickly and in ways not often anticipated.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rather than bury the lede, this table is catching my interest since it a.) looks at the forward SP 500&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[90,91],"tags":[],"class_list":["post-13958","post","type-post","status-publish","format-standard","hentry","category-apple-aapl","category-weekly-earnings-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/13958","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13958"}],"version-history":[{"count":6,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/13958\/revisions"}],"predecessor-version":[{"id":13966,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/13958\/revisions\/13966"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}