The Russell 2000 is in an earnings recession; however, it will likely end this quarter as companies beat earnings estimates. Currently, analysts expect 19Q3 YoY earnings to decline 0.8%. Expectations are low for the financials sector, which represents 20% of the index’s weight. In aggregate Russell 2000 financials companies have reported 19Q3 earnings 4.5% above estimates. If this continues, it should be enough to push the index into positive earnings growth and end the earnings recession.
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