Watch the trends, specifically by how much companies are beating on earnings. With market valuations still lofty, investors have positioned for strong beats -- anything to contrary will be met with a swift negative reaction.
Thus far, 10.8% of the S&P 500's undefined market cap has reported second quarter earnings. Earnings are beating by 4.5%, with 84% of companies surpassing bottom-line estimates according to data from Credit Suisse. The problem: companies beat on earnings by 4.8% in the first quarter.
Interestingly, the slowing degree in which profit estimates are beating comes as revenues are eclipsing estimates at a higher rate. Credit Suisse' data shows that the 10.8% of the S&P 500 that has reported has beaten revenue forecasts by 2.8%, better than the 1.1% in the first quarter.
Not entirely surprising to see as inflationary forces in wages and oil outweigh gains in sales. If only the bulls were paying attention.
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