July ’16 was a good month for the SP 500, with the main benchmark rising 3% – 4%.<\/p>\n
The Technology sector led the way, rising roughly 7%.<\/p>\n
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SP 500 Earnings Data (by the numbers, courtesy of Thomson Reuters):\u00a0<\/strong><\/em><\/p>\n Analysis:<\/strong><\/em> The one sentence that jumped out while reviewing all the SP 500 earnings commentary from Thomson, Factset and Bespoke this mornings was Factset’s comment on page 2 of their “Earnings Insight”: “…the smallest drop in SP 500 EPS estimate for Q3 ’16 to date since Q2’14”. (Factset made a similar comment<\/a> in early June ’16).<\/p>\n Because the progression of revisions is typically negative for “forward” quarters, what Factset is seeing is that Q3 ’16, which would normally be seeing sharply negative EPS revisions following Q2 ’16 results, is seeing less onerous revisions. Per Factset, “This marks the smallest decrease in the bottom-up EPS estimate over the first month of a quarter since Q2, 2014”.<\/p>\n Here are the numbers per Factset:<\/p>\n The point being that the Q3 ’16 decline for the SP 500 EPS estimate has been just -0.7%.<\/p>\n That is telling readers Street analysts are becoming less negative about future quarters.<\/p>\n Conclusion: <\/strong><\/em>This is pretty “wonky”, navel-gazing and highly-technical stuff for readers, but the simple conclusion that readers should take away from the blog post today is that:<\/p>\n 1.)<\/strong><\/em> forward earnings for the SP 500 are EXPECTED to improve<\/p>\n 2.)<\/strong><\/em> The typical negative revisions seen around forward quarters at this time are in fact “less negative” indicating that analysts are becoming more optimistic about forward earnings.<\/p>\n\n
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