Earnings Season Draws To A Close–With Another (Slight) Warning

As of this morning, more than 75% of the companies in the Standard & Poor’s 500 stock index have reported fourth quarter earnings.

As per usual, the bulk of companies have beaten Wall Street earnings estimates. (This is just a game that Wall Street and CEOs play.)

But the degree of the beat falls short of the average over the last three years.

According to Credit Suisse, 64% of companies have surpassed their estimated earnings for the quarter. The overall earnings beat is 3.4%.

That compares, however, with a 70% beat rate over the last three years and an overall 4.9% beat.

One worry on Wall Street is that we’ve seen peak earnings growth. The numbers keep pointing in that direction.

We are, however, still on the positive side for earnings growth as a whole–the rate of growth may be falling, that is, but the rate is still positive.

U.S. stocks also have slipping global growth and the looming March 1 deadline for U.S.-China trade talks to worry about today. Today the Reserve Bank of Australia became the latest central bank to cut its growth forecasts. For the year to June 2019 the Australian economy will grow by 2.5%. That’s down from an earlier projection of 3.25%. The Australian economy is closely linked to trade with China so this is another vote for lower growth in China in 2019.

The Standard & Poor’s 500 is off 0.12% as of 2:30 p.m. New York time today. The Dow Jones Industrial Average, with its greater exposure to U.S. exporters, is down 0.59%. The iShares MSCI Emerging Markets ETF (EEM) is lower by 0.53%.

Technology shares are somewhat higher today on a good eaRnings report from Motorola Solutions. The Technology Select Sector SPDR ETF (XLK) is up 0.27% and that has enabled the NASDAQ Composite to hover near breakeven at this point of the day. But to illustrate the defensive nature of investor thinking today, the Utilities Select Sector SPDR ETF (XLU) is up 0.12%. The Financial Select Sector SPDR ETF (XLF) is down 0.66%.

Oil, which has been up and down lately as sentiment shifts on global economic growth, is up today with the U.S. benchmark West Texas Intermediate ahead 0.23% to $52.71 a barrel. The international benchmark Brent crude is higher by 0.76% to $62.10 a barrel.