Market Snapshot

Market Snapshot

February 01, 2021
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Bull Market Takes a Breather

On Monday, January 25, the S&P 500 and NASDAQ Composite overcame early losses to post new all-time highs.4

Stocks rode a roller coaster on Wednesday, falling sharply despite above-consensus earnings results, only to come roaring back the following day. Stocks suffered another broad retreat on Friday the 29, sending the major indices to their worst weekly performance since October.4,5

Earnings continued to surprise to the upside, with 81% of companies in the S&P 500 that reported results by last Thursday morning exceeding analysts’ expectations.6

Earnings Season - What is it?

Every few months, you may hear the phrase “earnings season” as you listen to financial news.

But what exactly is “earnings season,” and why is it important to Wall Street?

Earnings season is the time when a majority of publicly traded companies release their quarterly financial reports. Companies often go into great detail about their business, and some may guide what lies ahead.

Typically, earnings season starts several weeks after the calendar quarter comes to a close. For example, the fourth quarter's earnings season began in mid-January, and the majority of companies expect to release their earnings over the next six weeks.9

In recent weeks, some market watchers have expressed concerns about stock-price valuations. Stocks are currently trading at about 23 times 2021 earnings, above the historical range of 15 to 17 times forward earnings.10

Expectations for a robust economic rebound may explain today's valuations; a rise in corporate earnings may accompany these. As earnings season gathers momentum, we’ll be able to see if the optimism is warranted.11

Over the next few weeks, you can expect to hear some upbeat comments about the fourth quarter. But brace for some negative reports. If you hear some confusing commentary, please give us a call. We'd welcome the chance to talk about what earnings are saying about the overall economic outlook.

February: Key Economic Data - Dates We're Watching

Monday, 2/1: Institute for Supply Management (ISM) Manufacturing Index.
Wednesday, 2/3: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index.
Thursday, 2/4: Jobless Claims. Factory Orders.

Friday, 2/5: Employment Situation Report.

Source: Econoday, January 29, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

4. The Wall Street Journal, January 25, 2021

5. CNBC, January 29, 2021

6. The Wall Street Journal, January, 28, 2021

9. Insights.FactSet.com, January 22, 2021

10. CNBC.com, January 21, 2021

11. Insights.FactSet.com, January 22, 2021

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The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

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