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Market Update: 04-09-18

FIRST QUARTER EARNINGS PREVIEW WHAT TO WATCH

John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial

First quarter earnings season, which kicks off April 12–13, sets up to show solid growth, buoyed by tax reform. The S&P 500 Index has grown earnings at a double-digit clip in three out of the past four quarters, a trend that is poised to continue for the first quarter. The index could also extend its streak of 35-straight quarters of exceeding earnings expectations. In this week’s commentary, we preview what we expect may be a very strong earnings season and highlight some key dynamics we will be watching.

ANOTHER STRONG EARNINGS SEASON ON TAP

We expect a year-over-year increase in earnings for the S&P 500 in the 20% range for the quarter, based on consensus estimates and the average upside to estimates historically, a nice acceleration from the fourth quarter [Figure 1]. Reasons for optimism include...

Download the complete PDF with graphs here.

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