Trading resumes after two days of weather related disruptions,
but market behavior is unlikely to be normal as volatility and
volumes will likely be higher. Beyond the obvious post-hurricane
candidates that will be in the spotlight today like insurers
) and home improvement retailers
), the storm will likely have an impact on fourth quarter
earnings for a number of industries. We will be seeing the
storm's impact in a host of economic reports over the coming
weeks and months as well.
The storm hit during peak earnings season, forcing a number of
companies to push their releases to the later part of the week,
making the reporting calendar for the remainder of the week much
more crowded. But with more than 60% of the earnings reports
already known, we have a pretty good sense of how weak this
earnings season has turned out to be.
It is unlikely that remaining earnings reports will materially
change the overall weak tone of this reporting season. And as we
had suspected all along, earnings estimates for the fourth
quarter and beyond have started coming down, though they likely
have more room to go on the down side.
As of this morning, we have third quarter results from 303
companies in the S&P 500, or 60.6% of the index's total
membership. Total earnings for these 303 companies are down 2.5%
from the same period last year, with 60.7% of the companies
beating earnings expectations.
The performance on the revenue side is not much different,
with total revenues down 2% and only 37.3% of the 303 companies
are able to beat revenue expectations. The growth rates look even
weaker when Finance is excluded from the aggregate numbers.
Excluding Finance, total earnings and revenues are down 4.4% and
2.5% from the same period last year, respectively.
Earnings aside, we are days away from a close presidential
election and a number of important economic reports coming out
later this week. The most important economic report is Friday's
October non-farm payroll report, which will not only have a
bearing on the market, but will also get plenty of play in the
political discourse. The market is unlikely to get out of its
recent downtrend unless it gets a sense of how these issues will
are scheduled to be released today at 10:30 AM EST. For the week
ending October 19, crude inventories increased by 5.9 million
barrels from the previous week to 375.1 million barrels.
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