Stock Market & Economy Recap - Sunday, Aug. 8

S&P 500 Earnings Update

S&P 500 earnings per share (EPS) increased to $205.41 this week. The forward EPS is now +29.17% year-to-date. Q2 earnings scorecard so far: 89% have reported, 87% have beaten estimates, and results have come in a combined +16.4% above expectations with a +93.1% growth rate.

The S&P 500 index increased +0.94% this week, for another record.

S&P 500 price to earnings (PE) ratio is now at 21.6.

The S&P 500 earnings yield is now 4.63%, compared to the 10-year Treasury bond rate of 1.29%. The equity risk premium remains a healthy 3.34%.

Economic Data Review

The ISM Manufacturing PMI (Purchasing Managers Index) came in at 59.5 for July, down modestly from June (60.6) but still well in expansion territory for the 14th consecutive month. 17 of the 18 manufacturing industries reported growth in July.

New orders remain strong, while 73.8% of manufacturing purchasing managers reported paying higher prices for input materials (down from 84.8% last month). The prices index (chart above) came in at 85.7, down from the record high last month. The manufacturing sector is still booming despite the supply chain constraints.

The ISM Services PMI (Purchasing Managers Index) for July came in at a record high of 64.1. New orders increased to 63.7 (from 62.1 in June) despite the continued struggle with labor, input shortages, & inflation.

Prices paid for materials and service related input costs increased to a record high. So even though costs showed a modest monthly decline in the manufacturing sector, there was no such relief for the services sector.

The weighted ISM PMI (which takes into account the approximate weight of the services and manufacturing sectors in today’s economy) now comes in at 63. This equates to an approximate annualized economic growth rate of 5.1%.

The BLS employment report showed +943 thousand net jobs were created in July. June was revised up from +850 thousand to +938 thousand, and May was revised up from +583 thousand to +614 thousand, for a total of +119 thousand additional net jobs higher than previously reported.

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I/B/E/S data is courtesy of Refinitiv.

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