As the majority of third-quarter earnings reports have been released, we continue to see reasons for optimism and concern. Let’s take a look at where we stand and try to gain a little insight as to what we might expect in 2020. Be warned, when looking back, analysts seldom are right with their forecasts.

The third-quarter marks the third consecutive decline in quarterly earnings. However, the -2.2% we saw in the third quarter was less than the -2.8% that was previously forecast.  It should also be noted that 75% of S&P 500 companies beat analysts’ estimates with their third quarter results. That’s better than the five-year average of 72%.

Looking ahead to the final quarter of 2019, we see 17% of S&P 500 companies have issued negative earnings guidance. That’s tied for the highest number since 2006. There are other economic figures that are expected to be lower too:

• The year-over growth in the Conference Boardleading indicators is estimated to come in at 0.3%. That’s the slowest since 2016.
• The Atlanta Fedestimates fourth-quarter S. economic growth to be 0.4%, the lowest since 2015.

With the S&P 500 up 24% so far in 2019, analysts are concerned too much hope is pinned on a very successful holiday shopping season for retailers. The chart below is a great visual to see that 24% gain.

Thanksgiving takes place this week. I’d like to personally take a minute to thank my wonderful partners at Vertical Financial Group for all their help in putting this boutique firm together. I’d also like to thank our incredible team members that work so hard for the benefit of our clients every day. And lastly, I’d like to thank all of our clients and readers of this market commentary. Without all of you, none of this would be possible. Thank you all.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Consult your financial professional before making any investment decision.  You cannot invest directly in an index.  Past performance does not guarantee future results.
 
This blog was prepared by David M. Kover, CFP^® C(k)P^®

Sources:  Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal, FactSet.   Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  

Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors, LLC.