S&P 500 Earnings Update & Economic Data Review - Saturday, April 3

The earnings per share (EPS) for all S&P 500 companies combined increased to $175.54 this week, which is an increase of 0.2% for the week and +10.4% year-to-date.

Sixteen S&P 500 companies have already reported Q1 results (3.2%). So far, 88% of those companies have reported earnings above expectations, and by a combined 7% above those estimates.

The S&P 500 increased 1.14% during this holiday-shortened week, another all-time high.

The price-to-earnings (PE) ratio increased to 22.9.

The earnings yield on the S&P 500 is now 4.37%, while the 10-year Treasury bond rate is 1.679%. The equity risk premium (earnings yield minus 10-year Treasury rate) is now 2.688%. Valuation, in relation to fixed income alternatives, is not as attractive as it was months ago, but it still favors stocks by a fairly comfortable margin.

Economic Data Review

According to the Consumer Confidence Survey, consumer confidence soared in March. The index came in at 109.7, beating expectations of 96.7, a gain of 21% over February (which was revised down from 91.3 to 90.4). The Present Situation Index -- based on consumers’ assessment of current business and labor market conditions -- gained 22.8%, and the Expectations Index -- based on consumers’ short-term outlook for income, business, and labor market conditions -- gained 20.6%.

“Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos, and several big-ticket items. However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”

The monthly increase is the highest percentage gain since November 2011.

The index is now at its highest level since March 2020, but still down 8% from this time last year.

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I/B/E/S data from Refinitiv.

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