Earnings Beats Are Concealing Bad Results

S&P 500 earnings are still ‘poor,’ even if they are better than expected

by Tomi Kilgore
Market Watch

Investors shouldn’t be fooled by this season’s “better-than-expected” earnings—they are still pretty bad.

With nearly 90% of the S&P 500 companies having reported second-quarter results through Friday morning (437 out of 505), aggregate earnings-per-share for the group are on course to decline 3.5% from a year ago, according to FactSet.

Many Wall Street strategists are pleased, because that is a lot better than expectations of a 5.5% decline on June 30, just before earnings reporting season kicked off. So are investors, as the S&P and Nasdaq Composite Index closed in record territory Friday, and the Dow Jones Industrial Average closed less than 0.3% away. Read more in Market Snapshot.

But that is like saying you should be happy with the “D” you got, because it would really be a “B” if the teacher changed the scale to grade on a curve.

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