Well, stocks had a pretty steep sell-off on July 19 with the S&P 500 falling by roughly 60 bps to finish the week at 2976. Pretty much back to where we were yesterday at 2 PM. Not surprising given it is the middle of July and a Friday.
Again, we are still in limbo as to which way the market goes from here. However, it seems that the trend is now starting to point to lower prices, potential 2940 or even 2915. But given the strong June performance, a minor pullback in July isn’t the end of the world. We will explore this more over the weekend.
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Earning Coming In Better
Anyway, Earnings are now pouring in with about 15% of the companies in the S&P 500 so far, and of those 75% have topped estimates, while 18% have missed, and 6.5% have met. Pretty much in line with the historical norm.
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But more importantly, earnings estimates have been coming down, with 2019 now at $163.13 and 183.03 for 2020. It leaves the S&P 500 trading at roughly 16.3 times 2020 earnings estimates.
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Which is still a fairly low earnings multiple for the index.
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Sales and Margins
The one saving grace may come in the form of sales and margins. Revenue growth is up again this quarter by about 3.7%, while margins have expanded to 11.4% from 11.2% last quarter.
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We are still early in the reporting season and results continue to come in better it could provide a second-half tailwind for stocks.
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