Market Commentary 08/02/23

More than 90% of S&P 500 companies have reported first quarter earnings, with most results exceeding expectations. Approximately 78% of S&P 500 companies reported first quarter earnings that surpassed consensus estimates, up from 68% in the fourth quarter of last year. This is also slightly above the 20-year average of 67% for earnings beats. The above-average number of earnings beats is encouraging, but there is a potential explanation. First quarter earnings estimates for the S&P 500, Nasdaq 100, and Russell 2000 were revised lower throughout the first quarter. These downward revisions may have set the bar too low, leading to more companies beating expectations. Supporting this thesis, estimates were revised higher over the past month as more companies reported first quarter results. The upward revisions, combined with the 78% beat rate, suggest Wall Street analysts may have been too negative going into the quarter.

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