Stock Market & Economy Recap - Sunday, June 6

S&P 500 Earnings Update

The S&P 500 earnings per share (EPS) increased to $191.52 this week. This is the tenth straight week the EPS has increased. Q1 earnings have largely wrapped up, with 99% of the index having reported. 87% of companies have beaten estimates, and combined earnings have come in 22% above expectations.

The S&P 500 increased 0.61% this week, closing just shy from another record.

The S&P 500 price to earnings (PE) ratio is now 22.1.

The S&P 500 earnings yield is now 4.53%, which is still reasonably priced in relation to fixed income alternatives, as the 10-year treasury bond rate fell to 1.56%.

Economic Data Review (Previous Two Weeks – In the Order in Which They Were Reported)

Consumer Confidence came in at 117.2 for May, -0.3% below last month (which was revised down from 121.7 to 117.5), and +36.4% higher than a year ago. February and March results were both revised higher by +5.3% and +5.4%, respectively. According to the report:

“Consumers’ assessment of present-day conditions improved, suggesting economic growth remains robust in Q2. However, consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead.

"Consumers were also less upbeat this month about their income prospects—a reflection, perhaps, of both rising inflation expectations and a waning of further government support until expanded Child Tax Credit payments begin reaching parents in July.

"Overall, consumers remain optimistic, and confidence should remain resilient in the short-term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”

Consumers' expectations index declined 8.2% for the month. The percentage of consumers expecting business conditions to improve over the next six months declined 8.5%, while the percentage of consumers expecting business conditions to worsen over the next six months increased 22.3%.

New Home Sales for April came in at 863 thousand, which is 5.9% below the prior month (which was revised down from 1021 thousand to 917 thousand), and 48.3% higher than a year ago.

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Disclosure: I own shares of CrowdStrike, Zscale, and Fortinet. I/B/E/S data is from Refinitiv.

Disclaimer: None.

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