Stock Market & Economy Recap - Saturday, Aug. 14

S&P 500 Earnings Update

S&P 500 earnings per share (EPS) increased to $205.89 this week. The forward EPS is now +29.5% year-to-date. 91.4% of S&P 500 companies have now reported Q2 results. 87% have beaten estimates, and results have come in a combined +16.4% above expectations. Q2 EPS growth is now +93.8%.

The S&P 500 increased +0.71% for the week, for yet another record.

The S&P 500 price to earnings (PE) ratio is now at 21.7.

The S&P 500 earnings yield is now 4.61%, with a dividend yield of 1.30%, compared to the 10-year Treasury bond rate of 1.297%. The equity risk premium remains a healthy 3.31%.

Economic Data Review

The NFIB small business optimism index decreased to 99.7 in July, down -2.7% for the month and +0.9% over the last 12 months. 6 of the 10 index components declined for the month. The index remains above its historical average of 98.4.

The same dynamics remain in place, half of all small businesses are now reporting at least one unfilled position, while plans to fill open positions also remain near a record high. I suspect some relief is in sight with unemployment benefits set to expire next month.

Compensation remains near a record high and 27% plan to raise compensation in the next three months (near a 48-year high). Price increases and plans to increase prices remain near a 40-year high. Small business owners report their biggest problems remain quality of labor, taxes, regulations, & inflation. Overall, it was a slight disappointment, but I think a lot of these issues have already been accepted and discounted.

The Consumer Price Index (CPI) increased +0.5% in July, for an annualized rate of +5.3% (unchanged from +5.3% last month). The biggest contributors coming from fuel & gasoline (+2.4% for the month, +41% for the last 12 months), energy services (+8% for the month, +7.2% over the last 12 months), and food (+0.7% for the month, +3.4% over the last 12 months).

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I/B/E/S data is from Refinitiv.

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