As the fourth quarter earnings season continues, investors are closely tracking the performance of the 72 companies in the S&P 500 that have reported so far. Of those, 65% have beaten expectations, a lower proportion than the 5-year and 10-year averages. As the market continues to grapple with fears of a possible recession, analysts have lowered their earnings per share (EPS) estimates for many of these companies.
The Dow Jones Industrial Average rose more than 100 points on Monday, but the S&P 500 and Nasdaq both fell. The Travelers Companies (NYSE:TRV) led the Dow higher after the insurer reported better-than-expected earnings. Microsoft and Alphabet will likely be two of the three most profitable companies in the S&P 500 for the quarter, with business still strong for both tech giants.
Seventy members of the S&P 500 are expected to report results during the week of January 23rd. To date, the number and magnitude of positive earnings surprises reported by S&P 500 companies are below their 5-year and 10-year averages. Given this, analysts are lowering their EPS estimates more than normal for S&P 500 companies.