What Q3 Earnings Season Teaches Investors
Earnings season is now well underway. We are getting closer to 100 out of the S&P 500 Index (INDEXSP:.INX) 500 companies reporting their financial progress over a tough year for businesses globally. With 20% of reports now priced into the stock market, we have a better picture of the economy’s health and how investors should be tackling the market.
A notable report yesterday was Intel Corporation (NASDAQ:INTC). Intel’s stock price dropped 10% this morning off the back of their missed earnings expectations.
In the overall stock market, earnings are down roughly 11% from one year ago. Whereas, 86% (more than 4 out of 5 companies) of companies that have reported so far have beaten their earnings estimates. A contextual key to keep in mind is those estimates have been revised and beaten down to keep expectations low in a year where the pandemic has plagued the large majority of businesses. Unemployment rates are still diverging from the stock market prices.
The sectors with the weakest Q3 earnings have been transport, energy, and consumer discretionaries—all for pretty obvious reasons. The Midas team has taken no vacations for an extended period of time. The sectors that have shown the most resilience during these times have been utilities, technology, and retail. Online retailers doing a lot of the heavy lifting in that sector.
Watch the full interview to find out which stocks you should be watching as more earnings are being released today and in the coming weeks ahead of the election.
As traders wait for certain earnings reports to be released and for the election to pass to determine how to allocate their capital within the stock market, the Midas Letter team waits for January, where an estimated $15 TRILLION technology breakthrough is expected to become operational.
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