The stock market bulls are clearly winning in 2017. As the U.S. economy heats up, the bottom line of S&P 500 companies is swelling once again.
As you all know, we’re still finishing up the 4Q16 Earnings Season. Here's the score so far:
- 452 of 500 S&P 500 companies have reported results
- Aggregate year-over-year SALES growth = +4.6%
- Aggregate year-over-year EPS growth = +4.9%
- Information Technology (61 of 66 reported): 7.0% and 10.3% sales and earnings growth
- Financials (61 of 63 reported): 4.4% and 7.9% sales and earnings growth
Those are a few of the winners. The key callout on the losing side is Energy (XLE) which has had an unequivocally bad Earning Season:
- 31 of 35 “Energy” companies in the S&P500 have reported results
- Aggregate year-over-year SALES growth = +2.6%
- Aggregate year-over-year EPS growth = -10.1%
Earnings exuberance (outside of the Energy patch) is clearly being priced into markets. That's why Tech, Healthcare, Consumer Discretionary and Financials are leading year-to-date. Unsurprisingly, the Energy sector is the laggard after posting underwhelming earnings growth.
Here's the sector performance update:
- S&P 500: +5.6%
- Technology (XLK): +8.6%
- Energy (XLE): -4.9%
We remain bullish on the U.S. stock market as earnings growth mirrors the broader acceleration of the American economy.