Is S&P 500 Ready to Touch Previous Highs?

   Schwaben Blog

October 16, 2015

Weekly Statistics:

Today Week Ago Year Ago
16-Oct-15 09-Oct-15 16-Oct-14
S&P TSX 13,838 13,964 14,227
S&P 500 2,033 2,015 1,862
DJIA 17,216 17,084 16,117
OIL $47.17 $49.49 $79.84
USD vs CAD 0.7757 0.7725 0.9012
Gold $1,177 $1,156 $1,244

The earnings season for the S&P 500 kicked off last week with Alcoa reporting well below analysts’ estimates. On September 30, the estimated earnings decline for the S&P 500 for Q3 2015 was -5.1 percent. As of today, the earnings decline has been revised to -4.6 percent. This can be attributed to the positive earnings surprises released by many companies. Of the 58 companies that have already reported their Q3 earnings, around 81 percent have reported above the mean estimate. At the sector level, the Information Technology (100%), Health Care (100%), and Energy (100%) sectors have the highest percentages of the companies reporting earnings above estimates, while the Materials (33%) sector has the lowest percentage of companies reporting above estimates. These positive surprises combined with the release of the FOMC’s meeting minutes, which showed the strength of the US economy, have led to a rally of more than 4 percent across the major indices of the US. Equities are rebounding from their worst quarter in four years, while investor sentiment oscillates between ripple effects of a slowdown in Chinese economy, and optimism that the Federal Reserve won’t raise interest rates until policy makers are satisfied that overseas turbulence won’t derail the US growth. The S&P 500 has rallied around 8.5 percent from the low during August selloff and is only 5 percent away from it’s all time high of 2,135 but with tax-loss harvesting around the corner, investors should be careful and should not consider every dip in the markets as a smart buying opportunity.

Source- Bloomberg, Globe Investor Gold, Financial Post, Market Watch, Trading Economics

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